The Biden administration plans to announce another extension to the payment pause for federal student loan borrowers, sources tell CNBC.
The pause is likely to last through August. This would be the sixth extension of the break, which has now spanned two presidencies.
Currently, the pandemic-era relief policy suspending student loan bills is scheduled to lapse in May.
Former President Donald Trump first announced the stay on bills for the millions of Americans with education debt in March 2020, when the coronavirus pandemic brought the U.S. economy to its knees and joblessness soared. Nearly all borrowers eligible for the pause have used it, with just around 1% of them continuing to pay, according to an analysis by higher education expert Mark Kantrowitz.
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The country has emerged from the darkest days of the pandemic and the unemployment rate has come back down. Yet the Biden administration has expressed reluctance to resume the payments before it makes its decision on student loan forgiveness.
“The president is going to look at what we should do on student debt before the pause expires, or he’ll extend the pause,” White House Chief of Staff Ron Klain said last month on the podcast “Pod Save America.”
“Joe Biden right now is the only president in history where no one’s paid on their student loans for the entirety of his presidency,” Klain said.
Democrats and advocates had warned that resuming the payments after more than two years could have signaled to some that Biden was turning away from his vow to forgive at least $10,000 in student debt for all, leading to damaging headlines and lower turnout at the polls come November.
Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Elizabeth Warren, D-Mass., are pushing the president to cancel closer to $50,000 per borrower.
Nearly 66% of likely voters are in support of the president forgiving student debt, with more than 70% of Latino and Black voters in favor, a recent poll found.
Even prior to the public health crisis, student loans were a major challenge for many households. Outstanding education debt exceeds $1.7 trillion, burdening families more than auto or credit card debt. Some 40 million people in the U.S. have loans from their schooling, and more than a quarter are past due.
Yet Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, warned that the repeated extensions will cause their own issues for the lending system.
“What’s a borrower to believe or plan for anymore when the government keeps changing its mind?” Buchanan said. “When the inevitable resumption does finally happen, millions of borrowers will likely miss it and go delinquent because of the false expectations the government is now setting.”
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