Biden Won’t Extend Student Loan Relief Amid a Backdrop of Financial Hardship and New COVID Variant

UPDATE: Good news! Since this article was published, Biden has announced that he will continue the pause on student loan repayment until May 1st, 2022.

President Joe Biden plans to resume student loan payments on Feb 1, 2022, after nearly a two year pause coinciding with the COVID-19 pandemic.

In meetings this month between the Biden administration and loan forgiveness advocates, the administration conveyed the message that borrowers should have taken the last two years to prepare for resumed payments, POLITICO reported. Biden’s team was not swayed by fellow Democrats’ urges to extend the pause, and said there would be resources to help borrowers find the appropriate payment plan, including deferment.

“[Student debt is] holding people up,” Biden said on Nov. 16, 2020. “They’re in real trouble. They’re having to make choices between paying their student loan and paying the rent.”

On the campaign trail in spring 2020, Biden promised to cancel at least $10,000 of student debt per person. NPR reported on how Biden has not yet fulfilled this promise, though it has extended or expanded preexisting forgiveness programs.

The Student Debt Crisis Center found in a recent survey of 33,703 student loan borrowers that among student loan borrowers with full-time employment, 89% say they’re not financially secure enough to begin making payments after Feb 1, and 21% say they will never be financially secure enough to resume payments.

A coalition of over 200 organizations, including the Student Borrower Protection Center, a student loan advocacy non-profit, and the ACLU, NAACP and American Federation of Teachers, authored a letter urging the Biden administration to extend loan relief.

“In fewer than 60 days, tens of millions of student loan borrowers are slated to be thrown back into repayment on federal student loans they are ill-equipped to pay as the deadly Covid-19 pandemic continues to devastate Americans’ health and financial security,” reads the letter authored by the coalition.

“It is clear that payments should not resume until your administration has fully delivered on the promises you made to student loan borrowers to fix the broken student loan system and cancel federal student debt.”

The announcement comes at a time when the US inflation rate has risen to 6.8%, the highest since 1982, as reported by the US Bureau of Labor Statistics on Dec 10. Additionally, 33.1% of Americans say their financial situation is “somewhat worse off” or “much worse off” than it was a year ago, according to recent Nov 2021 data from the New York Federal Survey of Consumer Expectations.