ED Reportedly Pushing White House for Another Extension of Student Loan Payment Pause

By Owen Daugherty, NASFAA Staff Reporter

The Department of Education (ED) is reportedly pushing the White House to issue another extension on the current pause in place on student loan payments and interest accrual for borrowers with federally-held student loans, according to Politico.

Citing sources familiar with the internal discussions, Politico reports ED officials are recommending the White House extend the relief to borrowers one more time, through at least January 2022. The current payment and interest accrual pause has been in place since March 2020 at the onset of the pandemic and has been extended three times, by both former President Donald Trump and President Joe Biden.

The relief for borrowers is currently set to expire at the end of September, but several top Democrats have been pushing Biden to issue another extension.

Notably, ED officials have not yet instructed the loan servicing companies tasked with handling collections about whether they should plan to resume their work in October, Politico reports.

Neither ED, Education Secretary Miguel Cardona, nor the White House have announced their intentions regarding an extension of the payment pause, but pressure has been growing for weeks.

Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.), chairs of the Senate and House Education Committees, sent a letter to President Joe Biden urging him to extend the payment pause, arguing that borrowers do not yet have the information and support they need to navigate resuming repayment.

While Murray and Scott called for an extension “until early 2022,” Sen. Elizabeth Warren (D-Mass.) and Senate Majority Leader Chuck Schumer (D-N.Y.) sent a letter last month urging Biden to extend the payment pause until March 2022.

Much of the reasoning behind issuing another extension has been focused on giving student loan servicers, who are tasked with managing the $1.6 trillion federal student loan portfolio, more time to help the tens of millions of borrowers successfully transition into repayment.

However, a balancing act is in play as the Biden administration is messaging confidence about the state of recovery from the pandemic, the news outlet notes.

“Other advisers worry that continuing an emergency pandemic relief program into 2022 could undercut the administration’s messaging about the strength of the economic recovery,” according to Politico.

At the same time, there are questions regarding how the pause in payments relates to other, more widespread reforms to the student loan landscape, such as student debt cancellation that progressives have consistently clamored for.

“Some progressives who are pushing for an extension of student loan relief hope that it’s a prelude to the widespread cancellation of student loan debt that they’ve been seeking,” Politico added


Publication Date: 7/9/2021

Peter G | 7/9/2021 11:57:45 AM

As I commented in the other article, the logic for extending the pause isn't (necessarily) the economy - it's taking the time to dig in and determine a better future for DL servicing, which has been fragmented and not entirely functional since 2010.

I get the symbolism and the $$ impact of getting people back into repayment, however a pause is the perfect opportunity to at least dig in to what the future of servicing should be.

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