Biden Pauses Student Loan Payments Through June

Topline

The Department of Education will extend the suspension on payments toward federally held student loans for an additional six months, as President Joe Biden’s plan to permanently forgive many Americans’ student loan debt remains tied up in the courts.

Key Facts

Borrowers who were originally set to resume payments on January 1, 2023, now won’t be required to pay until 60 days after Biden’s forgiveness program goes into effect, or 60 days after June 30, 2023, if the legal challenges are still unfurling by then, the White House said.

The White House said the move will give the Supreme Court the opportunity to resolve the case during the current term.

Big Number

16 million. That’s how many borrowers have been approved for student loan forgiveness, according to U.S. Secretary of Education Michael Cardona. Before applications were suspended on November 11, some 26 million Americans had applied for forgiveness.

Tangent

Last week, the Department of Education warned that student loan defaults could increase by a “historically large” margin if the forgiveness plan remained blocked by the courts.

Key Background

Payments for federal student loans have been on pause since March 2020, when the Covid-19 pandemic shut down the American economy. Both Biden and former President Donald Trump continued to extend the emergency relief until now. Under Biden’s loan forgiveness plan, which he announced in August, all borrowers making less than $125,000 annually would receive a one-time payment of $10,000, or $20,000 for Pell Grant recipients. But the plan is facing two legal challenges, one from a group of Republican state officials and another from a conservative group. Last week, the Biden Administration asked the Supreme Court to reinstate the program after it was blocked by a lower court.

Further Reading

White House to Extend Student-Loan Payment Pause to June 30 (Bloomberg)

Biden Asks Supreme Court To Reinstate Student Loan Forgiveness — Here’s Where Program Stands Now (Forbes)