President Joe Biden announced Wednesday that the federal government will extend a moratorium on student loan payments through August 31.
It comes as progressives continue to pressure the White House to cancel the college’s debt entirely, while Republicans slam the moratorium as an “insult” to taxpayers.
It was due to end May 1, but officials are scrambling to give Americans a few more months of respite as the economy continues to recover from the COVID-19 pandemic and as the cost of consumer goods continues to climb to record levels.
“Today, I am announcing that my administration is extending the moratorium on federal student loan payments through August 31 of 2022,” the president said in a videotaped statement.
I know people have been terribly hot because of this pandemic. And although we’ve come a long way in the past year, we’re still recovering from the economic crisis it caused.
Biden added that the extension will “help Americans breathe a little bit easier as we recover and rebuild a little bit from the pandemic.”
Direct borrowers who need “readiness to resume payments support” to a federal website, StudentAid.Gov.
In a separate White House statement, the president warned that “if loan payments resume on schedule in May, analysis of recent data from the Federal Reserve indicates that millions of student borrowers will face significant economic hardship, and defaults and defaults could threaten about payment. Financial stability of Americans.
House Speaker Nancy Pelosi said Biden’s announcement on Wednesday is “a major step forward in Democrats’ fight to help Americans struggling with rising costs.”
It comes a day after progressive Rep. Alexandria Ocasio-Cortez (D-N.Y.) claimed that payment deferment rather than debt forgiveness outright only prolongs the anxiety felt by millions of Americans grappling with federal student loans.
More than 40 million of those borrowers have not been required to make payments in more than two years, since the CARES Act was first signed into law under Donald Trump.
The interest rates on student loans held by the government will also remain at zero.
The Biden administration extended the moratorium by 90 days in late December amid the Omicron virus wave.
Borrowers affected by the moratorium owe a combined $1.6 trillion in debt held by the US government, according to the latest data from the Education Department.
But members of the progressive “squad” of House Democrats believe it is not enough to help.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) criticized the extension as merely prolonging the uncertainty felt by people with thousands of dollars in student debt.
“I think some people are reading these extensions as smart politics, but I don’t think these people understand the panic and turmoil that causes people to get so close to these deadlines just to extend the uncertainty,” the Democratic campaigner said on Twitter on Tuesday.
It does not have the effect (sp) that people think. We must cancel it.
Members of the Progressive Division Reps. Alexandria Ocasio-Cortez (left) and Ayanna Pressley (right) have been among the most prominent voices in Congress pressing for Biden to cancel federal student loan debt.
She added, “A lot of people have asked me, ‘My payments are one hundred/thousand dollars a month.'” What do you think will happen in May? I need to make sure I postpone X medical procedure or prescription/sell my car/X major change to get ready. Forgetfulness and uncertainty are also stressful.
Her colleague in New York, Rep. Jamal Bowman (D-N.Y.), noted that Biden promised to reduce student loan debt during his 2020 presidential campaign.
Bowman wrote to Biden on Twitter: “You made a promise to the American people and it’s time for you to follow through. Cancel student loans and help us open up a better and brighter future for over 45 million people in this country.”
During his time in office thus far, the president has authorized program expansions that have resulted in significant student loan forgiveness for more than 700,000 people, worth at least $17 billion.
However, many left-wing voters, especially young progressives who were initially skeptical of the Biden campaign, have felt the president has since fallen short of his goal of forgiving up to $10,000 in student debt per borrower.
Representative Adam Schiff (D-Calif.) urged Biden Tuesday night to move forward by canceling up to $50,000 in student debt for each borrower.
‘I think he needs to go further than that. We need to ease the burden, not just delay it. Let’s start by canceling up to $50,000 in debt per borrower. And let’s do it now, Mr. President,” Schiff wrote on Twitter after praising the extension.
Rep. Ayanna Pressley (D-Massachusetts) called on Biden to cancel student debt “and provide transformative relief to millions — especially Black women” in a tweet Tuesday afternoon.
“Black women are the most educated group in our country, but also the most burdened by student debt,” Presley wrote.
Ocasio-Cortez has claimed that the president’s student loan extension actually harms borrowers by extending the period of uncertainty
Fellow New York lawmaker Rep. Jamal Bowman noted that Biden promised to cancel up to $10,000 in student debt per borrower during the 2020 campaign.
Pressley also took part on Tuesday, highlighting the impact of student loan deferrals on Black women
Arkansas Republican Sen. Tom Cotton criticized the move as “reckless” when it was first reported on Tuesday.
Squad aside, Biden’s debt relief extension falls short of the expectations of dozens of Democratic lawmakers.
Nearly 100 members of Congress within the president’s party signed a letter last week urging the White House to extend the freeze “at least until the end of the year and meaningfully offer student debt cancellation.”
The effort was led by Sen. Elizabeth Warren (D) and Senate Majority Leader Chuck Schumer (DNY).
Student debt cancellation is one of the most powerful ways to address issues of racial and economic equality. The lawmakers wrote that the student loan system reflects the many inequalities that plague American society and the widening racial wealth gap.
“Student debt cancellation should be a key measure in your comprehensive approach to promoting equality as our nation works to rebuild a stronger and more equitable economy.”
Nearly 8 million jobs have been created under a Biden presidency so far, indicating a strong rebound from the economic slowdown of the pandemic.
However, the recovery has also sent consumer prices to an all-time high — inflation rose 7.9 percent in February compared to the same time a year ago, according to the latest available Labor Department data. The figure is the highest in 40 years.
Warren, Schumer, and Pressley released a recent analysis showing that resuming federal student loan payments could take $85 billion out of the U.S. economy each year.
Congressional Republicans have taken an opposite approach to Democrats on student loan debt, calling for Biden to end the freeze and claiming it is an unfair burden on taxpayers.
Sen. Tom Cotton (R-Ark.) tweeted that the move was “reckless” after word broke.
President Biden’s permanent student loan deferment is an insult to every American who has responsibly paid their debts. “There is no free lunch: This reckless move puts taxpayers on the hook for billions,” said Cotton.
“Reckless loan-forgiveness policies are a short-sighted answer that will crush American taxpayers and leave our higher education system more broken than before,” Republican lawmakers on the House Education and Labor Committee said last month.
“This administration is more interested in appeasing the progressive wing of the Democratic Party than in offering solutions to address the rising cost of college.”
Conservative podcast host Megyn Kelly criticized Ocasio-Cortez for championing what she called an upper-class “bulletin”.
“Everyone else in this country has always figured out a way to budget for their education, and again, it’s progressive masquerading as empathy,” Kelly said on her ruthless show.
“It’s a charity for the richer, the liberal, the coastal… It’s like the liberal coastal elite incarnate.”