At the request of President Joe Biden, the Department of Education on Thursday extended the nearly one-year pause in student loan payments through September, allowing the new administration to begin fulfilling its campaign promise to prioritize and begin addressing the debt crisis of more than $ 1.5 trillion.
Asking the department to issue a tolerance extension to federal student loans was one of 17 executive actions that Mr. Biden signed the first day in office Wednesday evening. Many, including their action on student debt and an extension of eviction and mortgage moratoriums, are aimed at relieving Americans of the economic burdens exacerbated by the coronavirus pandemic.
“Borrowers of all ages often find themselves in a tough compromise between paying off their student loans, investing in their long-term financial future, or paying their bills,” Biden administration officials wrote in a statement. “The pandemic has only increased the economic hardship of the millions of Americans who have student debt.”
Since March, all federal student loan payments have been suspended as part of the federal government’s response to COVID-19. An extension of the grace period was included in the first drafts of the December stimulus package, but yes cut in the final negotiations. Prior to Mr Biden’s executive action, payments were scheduled to resume in late January.
Student loan debt has been a financial problem approaching before the pandemic, but widespread job losses and coronary virus-related wage cuts, especially among millennials, have exacerbated the issue. . Last year, federal student loan debt hit an all-time high of about $ 1.6 trillion among more than 40 million Americans, according to the Federal Reserve Bank of New York. On average, student loan borrowers owe between $ 200 and $ 299 each month, an amount that for many is simply unsustainable; about 1 in 5 borrowers is defaulting, according to the U.S. Department of Education.
A Pew study in November found that nearly 6 in 10 borrowers said it would be “a little” or “very difficult” to restart their loan payments the following month.
“There are too many Americans struggling to pay for basic necessities and to provide for their families. They should not be forced to choose between paying off their student loans and putting food on the table,” a U.S. official wrote Thursday. Department of Education. announcing the extension of the tolerance contract.
On the campaign trail, Biden promised voters dealing with student loan debt would be one of his top priorities as president. But it is still unclear exactly how the incoming administration plans to deal with the $ 1.6 trillion debt. Recently, last week, Mr. Biden backed Congress for canceling $ 10,000 in federal student debt per borrower, but some of his more progressive Democratic colleagues say that’s not enough. During the 2020 presidential primary, Sen. Elizabeth Warren of Massachusetts proposed to forgive up to $ 50,000 in debt and Sen. Bernie Sanders of Vermont called for the cancellation of all student loans.
In December, Mr. Biden announced the head of Connecticut schools, Miguel Cardona, as secretary of education. If confirmed, Cardona, who spent two decades of her educational career as a public school teacher, would offer a direct juxtaposition to former Trump Secretary of Education Betsy DeVos, a multimillion-dollar champion of the Trump administration. school.
Under DeVos, the Department of Education warned that the transition will be chaotic when student loan payments are recovered. In its 2020 annual report, the department said it expects loan managers and the federal government to “face a heavy burden” in “converting” millions of borrowers into active repayment. ” According to the report, some of these borrowers will become delinquent.