Clock is ticking for Biden to make key student loan decisions – CNN | Vette Leader

Borrowers’ balances have been effectively frozen for more than two years, and payments have not been required on most federal student loans since March 2020 – when the coronavirus pandemic sent many Americans into lockdown. During this period, no interest will be accrued and collection of defaulted receivables has been suspended.

Now that the fate of borrowers is at stake, the President will spend several days on a long-awaited vacation. And the Biden administration has not sent any signals to suggest that they will announce a student loan decision during his absence.

Biden has already extended the pause four times, arguing time and again that there is a need to bail borrowers back on their feet. In April – when he last extended the repayment pause – he said that although the economy had strengthened, the country was “still recovering from the pandemic and the unprecedented economic disruption it has caused”.

In addition to potentially extending the pause, the White House has suggested that Biden is considering canceling $10,000 per borrower, excluding those earning more than $125,000 a year.

“We have not decided yet. … The Department of Education will notify borrowers directly of the end of the payment pause when a decision is made,” White House press secretary Karine Jean-Pierre told reporters Tuesday. “When it comes to cancellation … the President understands firsthand the burden that a student loan has on families … and so we’ll just continue to evaluate our options for cancellation.”

Jean-Pierre stressed that Biden would have something to announce “before August 31.”

With just three weeks until student loan servicers are expected to start collecting federal student loan payments again, Biden and his team are cutting it short. Typically, loan managers send out statements at least 21 days before a payment is due, but they haven’t gone out yet as Biden is still making up his mind.

“There has been no change to the Department of Education guidelines for many weeks. Service providers have been told to refrain from sending notices of resumption of payments,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance. a not-for-profit trade group whose members are responsible for managing over 95% of all government student loans.

While Biden didn’t announce a decision on the announced student loans before leaving Washington for the beaches of South Carolina on Wednesday, he is taking his vacation with headwinds from a couple of successful and chaotic weeks in the White House.

Over the past three weeks, Biden has dealt with a case of Covid-19 and a subsequent rebound, he has signed two major bipartisan laws, he has given the green light for the targeted killing of the man who succeeds Osama bin Laden as leader of Al Qaeda, and the Senate managed to pass a slimmed-down version of its landmark climate and health bill.
Despite concerns last month over the prospect of a recession, national unemployment figures defied economists’ expectations, gas prices have fallen further in recent weeks and elevated inflation eased in July. However, Americans are still paying more than they are used to for everyday items like groceries, gas and vehicles, leaving less room in their budgets.
The midterm elections are less than 100 days away and the latest data from CNN shows Biden’s approval rating remains low.

American attitudes toward student debt relief are heavily divided along party and generational lines.

A majority of Democrats in a May CNN poll (56%) — and an even larger majority of self-proclaimed liberals (69%) — say the government is doing too little with student loan debt, according to the CNN poll, compared to just a third of Republicans and self-proclaimed conservatives say the same thing. Seventy percent of adults under 35 say the government is doing too little, a figure that drops to 50 percent for those aged 35 to 49 and 35 percent for those aged 50 and over.
Continuing the deferral or debt relief could provide financial relief to borrowers. But sweeping student-loan forgiveness would also shift the cost – likely hundreds of billions of dollars – to taxpayers, including those who have chosen not to go to college or have already paid for their education. Loan foreclosures could also contribute to inflation without addressing the root of the problem: college affordability.
And the president has so far failed to get most of his college affordability proposals approved by Congress. The latest iteration of his proposed social safety net bill, dubbed the Inflation Reduction Act, was approved by the Senate this month and is now going to the Democrat-controlled House for a vote. However, the bill does not include previously proposed provisions that would have reduced college costs.

Aside from the pause in payments and an executive action to largely eliminate student loan debt, there are several other ways many of the 43 million state student borrowers may qualify for student loan forgiveness. Targeted debt relief programs are already in place to help public sector workers and borrowers who, for example, have been cheated by their for-profit college.

And under Biden, some of those programs have been temporarily expanded, making it easier for some borrowers to qualify for forgiveness. The administration has authorized more than $26 billion in targeted foreclosures for over 1.3 million borrowers – more than under any other president.

CNN’s Ariel Edwards-Levy contributed to this report.

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