President Joe Biden has announced plans to extend the student loan payment pause until the White House can resolve the legal issues surrounding student debt cancellation in a significant move for student loan borrowers. The decision comes as groups challenging the plan in court argue that Americans continue to feel the financial stress of the pandemic, and without this cancellation plan, more people could fall behind on their loans.
The Department of Education estimates that around 18 million borrowers were informed that their balance would be canceled. However, while this will alleviate some of the financial burdens on those individuals, it isn’t without cost; The General Accountability Office stated that this moratorium has led to $100 billion in lost payments and interest.
While some Republicans have challenged this plan, Secretary Miguel Cardona stated that those attempting to block student debt relief in the courts are merciless, and it has caused millions of borrowers extreme financial stress. Many cannot budget for their families or even plan for holidays because they need to know how much they will be required to pay back. He believes this is unfair and morally wrong.
There is broad support for Biden’s proposal, with many organizations and individuals throwing their weight behind it. Mike Pierce, executive director of the Student Borrower Protection Center, welcomed the extension, saying that it would provide much-needed relief to struggling borrowers during the holiday season and in the coming months. He continued by condemning the “baseless and backward attacks on working families with student debt,” praising the administration’s efforts to fight them back.
Although there are still legal challenges, the main argument from opponents is that Congress is the only group with the power to cancel such a large sum of debt. The Biden administration has countered by referencing the Heroes Act of 2003, implemented after 9/11 to assist military members.
Unfortunately, this month a federal judge in Texas ruled against this claim and stated that President Biden had exceeded his power. The Justice Department requests that an appeals court in New Orleans suspend the order while they appeal it. They have also asked the Supreme Court to overrule a federal court in St. Louis that halted Biden’s plan.
It remains to be seen what will happen. Currently, Biden’s plan remains blocked by the courts, and millions of borrowers are still waiting to find out if they will receive the debt relief they promised. In the meantime, this decision continues to be met with divided opinions among lawmakers and citizens alike. No matter what happens, it’s likely to significantly impact students and people with student loan debt across the country.
Meanwhile, the Biden Administration continues to help those struggling financially during the pandemic by issuing an executive order establishing a White House Council on Student Loan Debt Relief. The council’s purpose is to guide federal agencies in improving access to student loan debt relief options, increasing transparency about repayment options, and helping Americans understand their rights regarding loan repayment.
It will be interesting to see how the Biden Administration’s efforts play out in the coming months. While it remains uncertain how much of an impact these measures will have, they are a step in the right direction for student loan borrowers. In the meantime, we can only hope that this decision provides much-needed relief and stability during a difficult time.
