TEETERING ON THE EDGE OF A STUDENT LOAN CLIFF: The nation’s 40 million student loan borrowers are still waiting on the Biden administration to announce whether they’ll have to resume monthly payments in September. And whether they’ll have any of their debt canceled outright.
— The last-minute drama over restarting the $1.5 trillion student loan portfolio is familiar, as the White House weighs a seventh extension of the moratorium on payments and interest. But this time, the administration is cutting it closer to the restart of payments than any other point in the past two and a half years.
— President Joe Biden is set to return to Washington this week after a family vacation in South Carolina. He’ll be signing the major climate, tax and health care law that Democrats in Congress passed last week. The White House has not yet signaled whether any student loan decision is on tap for this week, though officials have repeatedly promised an answer by month’s end.
— For perspective: Most federal student loan borrowers have had monthly payments and interest suspended since the beginning of the pandemic roughly two and a half years ago. The freeze has been continued through a patchwork of legislation and subsequent executive actions that span several months at a time.
— But the debate over restarting student loan payments has never come this close to the edge of the cliff without an answer from the White House in either administration.
— The Trump administration twice extended the pause: Once in August 2020, 53 days before it was set to expire in the heat of the presidential campaign. And again in December, just before leaving office. It announced a one-month extension 27 days before the relief was set to end.
— The Biden team announced during the transition in January 2021 that they would extend the payment pause, then set to expire in 23 days. Biden subsequently extended the relief in August 2021 (55 days in advance of its expiration); in December 2021 (40 days); and most recently in April 2022 (25 days).
— As of today, borrowers have 16 days before the relief is officially set to expire.
— Reading the tea leaves: It’s widely expected that the Biden administration will again extend the payment pause. Among other signs, the Education Department has told student loan servicers to hold off on sending borrowers bills and has not been gearing up to restart payments. But, of course, it’s not official until it’s official.