Biden aides consider extending student loan freeze after court defeats

Biden aides consider extending student loan freeze after court defeats


White House officials are considering extending a pause on student debt payments after a federal appeals court blocked President Biden’s plan to forgive up to $20,000 in debt per borrower, according to two people familiar with the matter.

In August, Biden announcement that the administration would implement student debt cancellation while simultaneously ending a moratorium on student debt payments that began during the pandemic. But Biden’s plan has so far been thwarted in court. The United States Court of Appeals for the 8th Circuit, by a 3-0 vote on Monday, issued an injunction preventing the administration from moving forward with debt repayment, and a Texas judge last week declared the program illegal in a separate ruling.

Appeals court grants injunction against Biden’s student loan cancellation

Although the Biden administration has pledged to defend the program in court, White House officials have discussed in recent days the possibility of extending the debt freeze again if they are unable to move forward with the president’s original agenda. Payments were to resume on January 1 alongside the cancellation of the loan.

No decision has been made, and those briefed on the matter stressed that the conversations were preliminary. These people spoke on condition of anonymity to discuss the initial private interviews. The moratorium should not be extended indefinitely during Biden’s term, the people said, but extending it at least temporarily would bring some relief to borrowers. It’s unclear whether the president endorsed the idea or was involved in the planning, although senior aides have discussed the move.

“As the legal vulnerability has become increasingly clear, the White House has made increasingly firm plans to extend the loan repayment pause,” said one of the people familiar with the matter. “The extension we’re likely to see is intended to ensure borrowers don’t have the rug pulled out from under them, rather than an indefinite replacement of loan forgiveness.”

A White House spokesperson declined to comment.

The Biden administration could face a tough political challenge if the courts persist in striking down the program, which Republican lawmakers say is an unconstitutional violation of Congress’s spending power.

Biden’s program would have affected up to 40 million borrowers and forgiven up to $20,000 in student debt for people earning less than $125,000 a year, or less than $250,000 for married couples. The Congressional Budget Office, the nonpartisan marker of Congress, estimated that Biden’s plan would cost about $400 billion. The Committee for a Responsible Federal Budget, a DC-based think tank, estimated earlier this year that the debt break costs about $50 billion a year.

The Ministry of Education is no longer accepting requests for relief due to court decisions. More than half of eligible borrowers have already registered.

Biden’s student loan forgiveness plan stalled. Can you still apply?

Student debt activists have called on the administration to take action to help student borrowers despite court action.

Michael Pierce, who served as deputy deputy director of the Office of Consumer Financial Protection during the Obama administration and is now at the Center for Student Borrower Protection, called on the administration to “clarify that the student loan system will remain closed as long as as long as these partisan legal challenges persist. Pierce said Biden should explore other legal avenues to cancel student debt if the courts reject the one chosen by administration lawyers.

“I think that’s the bare minimum,” Pierce said of a possible extension of the moratorium. “The fate of the borrowers is in Biden’s hands.”

Conserved them income, while the debt moratorium is universal and helps affluent borrowers who can afford to continue making payments.

How President Biden decided to move forward with student loan forgiveness

“It seems like a clumsy way to try to bail out a student loan, but much less efficiently — it would benefit virtually everyone, including the wealthiest borrowers,” said Brian Riedl, policy analyst at the Manhattan Institute. , a libertarian. thinking group. “And that’s so far from the original point of the moratorium, which was mass unemployment and recession that is now long gone.”

The administration, meanwhile, has publicly maintained its belief that the program will be upheld by the courts.

“We are confident in our legal authority for the student debt relief program and believe there is a need to help the most needy borrowers as they recover from the pandemic,” the attaché said on Monday. White House press secretary Karine Jean-Pierre in a statement after the decision. “The administration will continue to fight these baseless lawsuits brought by Republican officials and special interests and will never stop fighting to support American workers and middle classes.”

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