Since the onset of the pandemic, the status of federal student loan repayments have been tied to the state of the economy and the White House’s effort to reduce the financial strain that borrowers have experienced during the ongoing crisis.
As we enter a new period of the pandemic, with the potential for waxing and waning periods of the virus, the White House is now indicating that the student loan repayment system will need to be significantly rehauled before borrowers are expected to resume repayments.
“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 in recent comments during a conversation with Pod Save America.
NEW: @WHCOS Ron Klain on what the president will do about student debt:— Pod Save America (@PodSaveAmerica) March 3, 2022
"The President is going to look at what we should do on student debt before the pause expires, or he'll extend the pause." pic.twitter.com/izoc0dLaVW
With the current payment pause slated to expire in May, roughly eight weeks away, the likelihood of another extension has significantly increased, especially with the White House having extended the national emergency declaration.
Prior to borrowers entering into repayment, the Department of Education (ED) will need to ensure that borrowers have transitioned to their new servicers, and communicate with borrowers that the repayment period is impending, as outlined by the CARES Act.
Previously, Klain indicated that the White House was looking into the administration’s legal authority to cancel student loan debt through executive action and that a memo would be issued “soon.” It’s been nearly a year since those comments were made and no memo has been offered, but a redacted document indicates that such a memo exists and has been in the possession of the administration for months.
Since the onset of the pandemic, Congress has yet to send the White House any legislation concerning the student loan landscape, though there have been some discussions centered on specific repayment plans. Meanwhile, Republicans have called on the administration to end the moratorium and Democrats have called for continued extensions, along with varying degrees of debt forgiveness, but it is unclear whether there will be an impending legislative vehicle in which Congress seeks to weigh in on student debt until the moratorium is lifted.
ED is also exploring changes to the student loan system through ongoing negotiated rulemaking, but any changes coming out of that process would not be implemented until July of 2023 because of public notice and master calendar requirements in statute.
Stay tuned to Today’s News for more information concerning the payment pause.
Publication Date: 3/7/2022