The student loan pause is set to end in just a few months, forcing millions of borrowers back into repayment again after an unprecedented three year moratorium.
The Biden administration has tied the latest extension of the payment pause to a legal battle over a separate student loan forgiveness program. But whether Biden will extend the pause yet again may depend on the fate of that program, as well as several other key factors.
Here’s what borrowers need to know.
Where The Student Loan Pause Currently Stands
President Donald Trump first enacted the student loan pause in March 2020 using emergency executive authority in direct response to the worsening Covid-19 pandemic. Congress then codified the pause through passage of the CARES Act, which provided statutory justification for the pause. The moratorium suspended student loan payments and froze interest for all government-held federal student loans, and stopped collections activities against defaulted borrowers.
But the student debt relief has lasted far more than the six months originally envisioned by Congress. President Trump, and subsequently President Joe Biden, issued multiple short-term extensions of the student loan pause, often just as an expiration date was approaching. Both presidents relied on the HEROES Act of 2003 which provides flexibility to “waive” or “modify” statutory or regulatory provisions regarding federal student loan programs in response to a national emergency, like a pandemic. After over half a dozen extensions, the moratorium has now been in effect for over 38 months.
Biden authorized the current extension of the student loan pause in direct response to the ongoing legal battle over his separate student loan forgiveness initiative. That plan, if enacted, would allow millions of borrowers to receive $10,000 or more in student loan forgiveness. But federal courts blocked the program last fall in response to legal challenges, and the Biden administration appealed to the United States Supreme Court. The Court heard oral arguments in February, and a ruling is expected sometime in June. The current extension of the student loan pause will continue until 60 days after either June 30 or the date of a Supreme Court decision.
Could Biden Extend The Pause Again After The Supreme Court Rules On Student Loan Forgiveness?
Whether Biden extends the payment pause yet again beyond this summer may depend in part on how the Supreme Court rules in the legal challenges over the one-time student loan forgiveness program. Top administration officials have indicated that if the Supreme Court rules favorably and upholds the program, payments would be expected to resume. The administration has justified the one-time student debt relief plan in part by noting that borrowers who don’t receive complete loan cancellation would have to resume payments, offsetting any inflationary impacts of mass student loan forgiveness.
If the Supreme Court strikes down Biden’s loan forgiveness plan, borrower advocates have urged the administration to extend the pause again and pursue a potential backup plan for enacting wide-scale student loan forgiveness using a different legal authority. But top administration officials have publicly said there is no backup plan. Furthermore, in comments to the Senate last week, Education Secretary Miguel Cardona testified that repayment will be resuming later this year after the Supreme Court issues a decision, regardless of what that decision is.
“We recognize that during the pandemic that was very difficult for borrowers. And we are committed to making sure that once the decision is made, that we’re going to resume payments for 60 days after, but no later than June 30,” said Cardona. “We’re going to begin that process.”
End Of Covid Emergency Could Remove Main Justification Of Student Loan Pause
The Biden administration officially ended the public health emergency associated with the Covid-19 pandemic last week. The emergency was the central justification for enacting, and subsequently extending, the student loan pause. The end of the emergency might make it harder for the Education Department to authorize further extensions.
The administration could nevertheless argue that even though the public health emergency has ended, further student debt relief is still justified. The HEROES Act authorizes relief “in connection with” a national emergency, and does not require that the national emergency be ongoing. Attorneys for the Biden administration argued before the Supreme Court in February that the statute — which was also the legal basis for Biden’s separate student loan forgiveness plan — can authorize relief for a period if time beyond the emergency period, if it is tailored to redress economic harm associated with that emergency.
Even with this potential legal justification, however, extending the student loan pause again could be politically (and potentially legally) fraught. But so could restarting payments for millions of borrowers just as the 2024 election season begins to heat up.
Lawsuits Seek To End Student Loan Pause
Meanwhile, multiple legal challenges are trying to force an early end to the student loan pause through the courts. SoFi, a major student loan refinancing company, filed a suit against the Biden administration arguing that the payment and interest moratorium has harmed its ability to make a profit. And in a separate case, a conservative-leaning nonprofit organization filed a request for a preliminary injunction last week, seeking an immediate end to the student loan pause.
“The CARES Act’s six-month student-loan debt payment pause reflected Congress’s considered judgment for when payments and interest must resume,” said Sheng Li, Litigation Counsel at the New Civil Liberties Alliance, a legal group leading the push for a preliminary injunction, in a statement. “The Department of Education had and has no authority to override that judgment.”
Advocates for borrowers have argued that neither challenger in the two suits can demonstrate legal standing, the requirement that the organizations would incur a concrete injury sufficiently tied to the challenged program to warrant relief. And a large coalition of hundreds of organizations have also warned that an abrupt return to repayment, when neither borrowers nor the Education Department’s contracted loan servicers are ready, could be disastrous.
Congressional Republicans Seek End To Student Loan Pause
While legal battles play out in courts, Congressional Republicans are seeking to use the legislative process to stop the ongoing student loan pause.
Last month, House Republicans passed a bill that would end both the student loan pause and Biden’s student loan forgiveness plan in exchange for raising the debt ceiling, which the country is set to breach in only a few weeks. The bill has little to no chance of passing the Senate, but was an opening bid by Republican lawmakers as negotiations over the debt ceiling continue.
Meanwhile, a key House committee moved forward last week with a resolution under the Congressional Review Act to repeal Biden’s student debt relief initiatives, including the latest extension of the payment pause. That legislation may stand a better chance of passing the Senate (where it will not be subject to a filibuster, unlike most other legislation). But Biden is highly unlikely to sign the bill into law.
These legislative efforts may ultimately not succeed, but they illustrate the broad pressures the Biden administration is facing as millions of Americans get closer to student loan payments resuming.
Further Student Loan Forgiveness Reading
Student Loan Forgiveness Eligibility Expanded In 3 Ways Under New Account Adjustment Guidance
$55 Billion In Student Loan Forgiveness Approved, Says Biden Administration — And More May Be Coming
Republicans To Advance Plan Reversing Student Loan Forgiveness Approvals For Millions
What The Supreme Court’s Latest Move Means For Student Loan Forgiveness
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