Education Secretary Betsy DeVos has extended the break on federal student loan payments due to the coronavirus pandemic through the end of January.
The freeze on monthly payments and the accumulation of interest on loans were due to expire at the end of December, but Democrats and consumer groups had called for an extension, arguing that repayments should not start again during the month. presidential transition and that they are expected to stay suspended due to uncertainty as to when another coronavirus relief bill could be passed by Congress.
“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been affected,” DeVos said in a statement Friday. “Overtime also allows Congress to do its job and determine what action it considers necessary and appropriate. Congress, not the executive, is responsible for student loan policy. “
Student loan relief – which began in March through the CARES Act, then was extended by the Trump administration – has brought relief to more than 40 million Americans as the coronavirus pandemic has taken its toll. wreaking havoc on the economy and straining household incomes across the nation. And the economic situation is unlikely to improve anytime soon – more than 5.8 million people are unemployed, and a new federal jobs report saw a slowdown in job creation.
The student loan freeze slightly improved the credit scores of student borrowers and helped defaulting borrowers avoid non-payment penalties such as wage garnishment, according to Urban Institute.
While DeVos has called on Congress to take relief action, the executive and legislative branches of government have options available to extend relief.
As Politico reports, the coronavirus relief bill passed by House Democrats in May would maintain the freeze until September 30, 2021 unless the unemployment rate improves. And a bipartisan bill unveiled in the Senate this week potentially offers some sort of payment relief until March.
When President-elect Joe Biden takes office, he will have the option of extending the moratorium on reimbursement through executive action, as the Trump administration has done. But Democratic leaders, progressives and many consumer groups are pushing for much more radical action on loan relief during Biden’s tenure: the outright cancellation of federal student loans.
Canceling student loans is a hot political debate on the left
Some progressives like Senator Elizabeth Warren (D-MA) have argued that the Higher Education Act gives the Secretary of Education “the power to start compromising and modifying federal student loans,” which means the president has the legal authority to write off student loan debt. unilaterally.
As Vox’s Dylan Matthews reported, Senate Minority Leader Chuck Schumer and Warren called on the Biden administration to use the executive branch to cancel the first $ 50,000 of federal student debt for every borrower with federal student loans. (Federal student loans are over 92 percent outstanding student loan balances, as opposed to loans issued by the private sector.)
Biden preferred more modest cancellation measures. He expressed his support for much more limited student loan relief – forgive $ 10,000 per borrower – but sources involved in his discussions on transition planning told the New York Times that he prefers any measure of annulment authorized by the law of Congress, and not executive action.
If Democrats succeed in gaining control of the Senate after Georgia’s two ballots – and therefore hold both houses of Congress – there could be a more serious discussion to do just that. But if Democrats fail to take control of the Senate in the January second round, pressure on Biden to take executive action to cancel loans could intensify.