At the request of President Joe Biden, the Department of Education on Thursday extended the already year-long interruption of student loan payments until September, so that the new administration could fulfill its campaign promise to prioritize and address the more than $ 1.5 billion debt crisis. .
The request for the department to issue an extension of tolerance on federal student loans was among 17 executive actions that Mr. Biden signed Wednesday night on his first day in office. Many, including his actions related to student debt and an extension to moratoriums on eviction and negatives, are aimed at relieving Americans of economic burdens exacerbated by the coronavirus pandemic.
“Borrowers of all ages are often faced with a difficult trade-off between paying off their student loans, investing in their long-term financial future or paying their bills,” Biden’s administrative officials said in a statement. “The pandemic has only increased the economic hardship of millions of students who have student debt.”
Since March, all federal student loan payments was suspended as part of the federal government’s COVID-19 response. An extension of the grace period was included in the early drafts of December’s stimulus package, but was cut into final negotiations. Before the actions of mr. Biden, the payments would resume at the end of January.
Student credit debt has been a looming financial issue since the pandemic, but widespread job losses with coronavirus and wage cuts, especially among millennials, have exacerbated the problem. According to the New York Federal Reserve Bank, federal student loan debt peaked last year at $ 1.6 billion among more than 40 million Americans. Student lenders owe on average between $ 200 and $ 299 each month, an amount that is simply untenable for many; about 1 in 5 borrowers are missing, according to the U.S. Department of Education.
A November Pew study found that nearly 6 in 10 lenders said it would be ‘somewhat’ or ‘very difficult’ to restart their payments on their loans next month.
“Too many Americans are struggling to pay for basic necessities and to take care of their families. They should not be forced to choose between paying for their student loans or putting food on the table,” a Department official said. of Education wrote in a statement Thursday. to announce the extension of the tolerance agreement.
On the campaign route, Mr. Biden promised voters tackling student loan debt will be one of his top priorities as president. But exactly how the incoming government plans to handle the $ 1.6 billion debt remains unclear. Recently last week, Mr. Biden threw his support behind congressional action to cancel $ 10,000 federal student debt per borrower, but some of his more progressive Democratic colleagues say it is not enough. During the 2020 presidential election, Senator Elizabeth Warren of Massachusetts proposed forgiving up to $ 50,000 in debt, and Sen. Bernie Sanders of Vermont asked to cancel all student loans.
In December, Mr. Bid Miguel Cardona, principal of Connecticut schools, as his choice for education secretary. If confirmed, Cardona, who has spent two decades of his career in education as a public schoolteacher, would offer direct cooperation with Trump’s former administration, Betsy DeVos, a billionaire champion of school choice.
Under DeVos, the Department of Education has warned that the transition will be chaotic when student lending resumes. In its 2020 annual report, the department said it expected lending services and the federal government would be given a “heavy burden” to ‘convert’ millions of borrowers to an active repayment. According to the report, some of the borrowers will become criminals.