It has been reported that President Joe Biden plans to extend the temporary suspension of federal student loan payments through the summer of 2023 as his plan to abolish student debt is challenged in court.
The Department of Education is expected to make the freeze extension announcement next week, according to CNN. The first installments are due two months from June 30 unless the Supreme Court approves the government’s debt elimination scheme by then. In a similar piece, Bloomberg also relied heavily on quotes from unnamed sources.
Former President Trump halted payments of federal student loans in March 2020 because of the lockdown-induced recession. If Forbes’s reporting is accurate, the next freeze will be the sixth time that Trump and Biden have extended the moratorium.
On December 31, the most recent extension of time to make payments on federal student loans expired. The Committee for a Responsible Federal Budget predicted that each month of the freeze would cost $5 billion, and there were speculations that the White House may extend it again. If the present suspension is extended through the end of 2024, it may cost an additional $120 billion, bringing the grand amount to $275 billion.
When President Biden said in an interview two months ago that the “pandemic is gone,” he shocked many federal health professionals. “If you observe, no one is wearing masks,” the CEO commented. Each of us is in excellent health, in my opinion. Therefore, I think a change is in the works. And I think this is a great example of that.
Debt relief in the amount of $10,000 per borrower with an annual income of less than $125,000 and $20,000 per borrower who received a Pell Grant is now being considered by the courts. The program has been halted by the Eighth Circuit Court of Appeals after the court agreed with Republican state attorneys general who had sued, arguing that the White House had gone around Congress without the required permission.
Solicitor General Elizabeth Prelogar asked the Supreme Court to rule on the legality of the government’s loan forgiveness scheme for students on Monday. Her piece, “The Eighth Circuit’s erroneous order puts millions of economically vulnerable borrowers in limbo,” makes the case that these individuals cannot make sound financial decisions because they do not have a complete picture of their debt.
The Department of Education has started contacting debtors about their loan cancellation approval. Education Secretary Miguel Cardona notified certain applicants who “qualified for loan relief” after analyzing their applications. We have informed your loan servicer of this permission,” the letter added. In the present moment, your actions are unnecessary.
A lot of the White House’s allies were conflicted over the move to cancel federal student loans. Before the recent midterm elections, Democratic candidates in swing states distanced themselves from the policy, and an economist in the Obama administration, Lawrence Summers, said that the policy “consumes resources that could be better used helping those who did not, for whatever reason, have the chance to attend college.”