The president announced that the freeze on federal student loan payments would be extended until June 30 while the courts considered any legal objections.
President Joe Biden’s debt cancellation proposal is still being challenged in court, so the Biden administration on Tuesday announced that it would extend the payment moratorium on federal student loans.
The payment suspension, which was originally scheduled to terminate in January, will now last until June 30 or until the conclusion of the legal action, whichever comes first. Payments will continue 60 days after June 30 if the lawsuit has not been settled by then.
In a video statement, Biden stated, “I’m completely convinced that my approach is legal.” However, it is unfair to demand that tens of millions of borrowers who qualify for relief start making payments on their student loans while the complaint is being reviewed by the courts.
In August, Biden declared he would forgive up to $20,000 in debt for each qualified borrower, but the decision was swiftly contested in court.
Following a federal appeals court’s rejection of the loan forgiveness proposal, the Biden administration sought the Supreme Court last week to revive it.
According to Biden, the Supreme Court will have sufficient time to consider the issue by the new deadline of June 30 for student loan payments to restart.
Since President Donald Trump signed the CARES Act in March 2020, which suspended payments through September 2020 and stopped interest from accruing in an effort to lessen the financial impact of the coronavirus pandemic, holders of federal student loans are no longer required to make payments.
Later, Trump issued an executive order extending the deferral period until January 2021. Six more extensions have been granted by Biden since taking office.
Borrowers receiving loans from privately held lenders are exempt from the moratorium.
In the US, there are almost 45 million students who are in debt. People were expected to owe more than $1.7 trillion in student loan debt in the third quarter of 2022, according to the Federal Reserve.
In spite of the Biden administration’s assurance that it will win in court, officials have been unable to specify what alternative measures the White House will take to reduce student debt in the event that the courts reject Biden’s cancellation proposal.