Comment White House officials are considering extending the moratorium on student debt payments after a federal appeals court blocked President Biden’s plan to cancel up to $20,000 in debt per borrower, according to two people familiar with the matter. In August, Biden announced that the administration would implement student debt forgiveness while also ending a moratorium on student debt payments that began during the pandemic. But Biden’s plan has so far been thwarted in the courts. The U.S. Court of Appeals for the 8th Circuit, in a 3-0 vote on Monday, issued an injunction preventing the administration from proceeding with the debt repayment, and a Texas judge last week declared the program illegal in a separate ruling. Court of Appeals Grants Injunction Against Biden’s Student Loan Although the Biden administration has vowed to defend the program in court, White House officials have discussed in recent days the possibility of extending the debt freeze again if they cannot move forward with the president’s original plan. Payments were scheduled to resume on Jan. 1 in conjunction with the loan write-off. No decisions have been made, and people briefed on the matter stressed that the talks were preliminary. These people spoke on condition of anonymity to discuss the first private conversations. The moratorium is not expected to be extended indefinitely during Biden’s term, the people said, but extending it at least temporarily would provide some relief to borrowers. It is unclear whether the president has signed off on the idea or was involved in the planning, although senior aides have discussed the move. “As the legal vulnerability becomes increasingly clear, the White House is making increasingly firm plans to extend the loan moratorium,” said one of the people familiar with the matter. “The extension we’re likely to see is intended to ensure borrowers don’t have the rug pulled out from under them, rather than an indefinite replacement for loan forgiveness.” A White House spokesman declined to comment. The Biden administration could face a difficult political challenge if the courts insist on repealing the program, which Republican lawmakers have argued is an unconstitutional infringement on Congress’s spending power. Biden’s plan would have affected up to 40 million borrowers and canceled up to $20,000 in student debt for people making less than $125,000 a year or less than $250,000 for married couples. The Congressional Budget Office, the nonpartisan congressional estimator, has estimated that Biden’s plan would cost about $400 billion. The Committee for a Responsible Federal Budget, a D.C.-based think tank, estimated earlier this year that debt relief costs about $50 billion a year. The Department of Education is no longer accepting applications for relief due to court orders. More than half of eligible borrowers have already signed up. Biden’s student loan forgiveness plan is blocked. Can you still apply? Student debt activists have called on the administration to take steps to help student borrowers despite the court moves. Michael Pierce, who served as deputy assistant director of the Consumer Financial Protection Bureau during the Obama administration and is now at the Student Borrower Protection Center, asked the administration to “make it clear that the student loan system will remain closed as long as they party legal challenges persist.” Pierce said Biden would have to explore other legal avenues to cancel student debt if the courts reject the one chosen by government lawyers. “I think it’s the bare minimum,” Pierce said of a possible moratorium extension. “The fate of borrowers is in Biden’s hands.” Conservatives are likely to shoot down any extension of the moratorium, which has been in place since President Donald Trump began it in March 2020. Many economists prefer Biden’s debt relief plan to the moratorium, in part because the debt relief is only for families below a certain annual income, while the debt moratorium is universal and helps affluent borrowers who could afford to keep paying. How President Biden Decided to Go Big on Student Loan Forgiveness “This seems like a knee-jerk way to try for a student loan bailout, but far less effective — it would benefit almost everyone, including the wealthiest borrowers,” said Brian Riedl, a policy analyst at the libertarian Manhattan Institute. think tank. “And it’s so far from the original point of the moratorium, which was mass unemployment and a recession that is now long gone.” The administration, meanwhile, has publicly maintained its belief that the program will be upheld by the courts. “We are confident in our legal authority for the student debt relief program and believe it is necessary to help borrowers who are most in need as they recover from the pandemic,” White House press secretary Karin Jean-Pierre said in a statement Monday. after the decision. “The administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle-class Americans.”
