According to an administration official familiar with the White House's decision-making, the Biden administration plans to extend a moratorium on federal student loan payments until August 31, extending a moratorium that has allowed millions of Americans to defer payments during the coronavirus pandemic.
After being halted since the beginning of the pandemic, student loan payments were set to resume on May 1. The White House, though, is planning to offer borrowers more time to prepare for payments in response to pleas from Democrats in Congress.
According to the most recent figures from the Education Department, the measure affects more than 43 million Americans who owe a total of $1.6 trillion in federal student debt. There are more than 7 million borrowers who have defaulted on their student loans, which means they are in default.
Bloomberg first the news of the extension on Tuesday.
Democrats on House and Senate education committees recently pushed President Joe Biden to prolong the ban until the end of the year, noting the ongoing economic uncertainty.
Senator Patty Murray has argued that additional time is required to assist Americans in planning for repayment and to reassess the government's current student loan repayment structure.
"It's destroying lives and keeping people back," she stated last month in a statement. "Borrowers are grappling with growing costs, regaining their footing after public health and economic disasters, and grappling with a flawed student loan system — and borrowers of color are feeling the brunt of it all."
Murray urged the Biden administration to give all borrowers a reprieve.
"Serious delinquency rates for student debt could rebound from historic lows to earlier highs in which 10% or more of the debt was past due," according to the bank.
In March 2020, the Trump administration provided Americans the option of deferring loan payments, and Congress made it automatic shortly after. The Trump administration prolonged the halt twice, and Biden extended it twice more.
It's unclear whether Biden will push universal debt forgiveness to help Americans pay down their school loans. Some Democrats in Congress have urged Biden to use executive action to erase $50,000 in student loan debt for all borrowers, arguing that this would assist the economy and benefit Black Americans, who have greater rates of student debt than whites.
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