It’s going to be a big week for millions of student loan borrowers, as President Biden is set to make major decisions on the student loan pause and wide-scale student loan forgiveness.
Here’s what we know.
Student Loan Pause Set to End in 9 Days
Federal student loan repayment has been suspended for most borrowers for over two years, along with interest accrual and collections efforts. The payment pause applies to government-held federal student loans. The suspension, originally enacted through the CARES Act nearly two and a half years ago, was supposed to provide a relatively brief six-month pause. But President Trump and then President Biden issued a number of short-term extensions. The pause is now in its 29th month.
Biden’s most recent extension of the student loan pause ends on August 31, which is just over a week away. No previous extension of the pause has ever been issued so close to the end-date. But given that the Education Department has instructed its loan servicers to not send out billing notices to borrowers, signs are pointing to another extension.
Education Secretary Miguel Cardona has indicated that Biden will make an announcement on the student loan pause within a week. “We know August 31st is a date that many people are waiting to hear something from,” he said in an interview on NBC on Sunday. “We’ve been talking daily about this, and I can tell you the American people will hear within the next week or so.”
Biden Said He Would Decide on Student Loan Forgiveness By August 31
The student loan pause is not the only significant student loan decision on Biden’s plate. Biden has also said he will make a final decision about enacting broad student loan forgiveness by August 31, as well.
Advocates for borrowers and progressives in Congress have been urging Biden for nearly two years to use executive action and cancel student loan debt on a mass scale “with the flick of a pen.” But Biden has so far resisted this campaign, opposing large amounts of federal student loan forgiveness and expressing skepticism that he has sufficient legal authority to act unilaterally.
In recent months, however, Biden’s position appears to have softened once it became clear that Congress would not pass a broad student loan forgiveness bill. The Biden administration has dropped several hints that the President is seriously considering some form of wide-scale student loan forgiveness initiative, including using legal arguments in recent court filings suggesting officials endorse a legal theory that existing federal law allows for at least some level of student debt cancellation. Meanwhile, the Education Department has reportedly already set up an administrative system to implement mass student loan forgiveness if Biden decides to proceed.
Biden May Decide on Other Student Loan Forgiveness and Relief Initiatives
While the big-ticket items Biden is evaluating are the student loan pause and wide-scale student loan forgiveness, Biden also must decide on how to proceed with other federal student loan relief initiatives:
- The Limited PSLF Waiver is an initiative that temporarily relaxes rules to expand relief through the Public Service Loan Forgiveness program. Advocates have been pushing Biden to extend the initiative, which is currently set to end on October 31.
- The IDR Account Adjustment is an initiative designed to provide retroactive credit towards borrowers’ student loan forgiveness term under federal income-driven repayment plans. The Education Department has not marketed this initiative nearly as much as it has focused on the Limited PSLF Waiver, but officials could complete this initiative by January. Advocates for borrowers are pushing for an extension of this program, as well.
- A new income-driven repayment plan is also under consideration, which could provide borrowers with lower monthly payments once the student loan pause ends. The Education Department released a proposed new income-driven plan last year, but it was widely criticized due to its complicated formula and strict eligibility rules that excluded graduate school borrowers and Parent PLUS borrowers.