The moratorium on federal student loan payments will be extended through May 1, because of the highly transmissible omicron variant of the coronavirus, which poses a new threat to the economy.
In a statement, President Joe Biden said that millions of student loan borrowers are still coping with the effects of the Pandemic and need some more time before they can resume payments. The White House for months maintained that Biden would not extend the pause beyond January 31st, warning borrowers that they should be prepared to resume payments in February even though Covid case numbers increased and inflation concerns gripped the country.
The president's language began to soften as the omicron variant spread rapidly, with White House press secretary Jen Psaki telling reporters on Tuesday that the president had not made a decision yet on whether to issue another extension.
Debt relief advocates and Democratic lawmakers have pressured Biden to extend the moratorium, especially after Sen. Joe Manchin, D-W. Va., said he would not vote for the president's Build Back Better Act, putting its prospects into doubt. The White House has said that the plan would address inflation concerns by lowering costs for items like prescription drugs and child care.
The Omicron variant is a scary reminder that the epidemic is still a serious concern and Americans can't be crushed by student debt as they shoulder this health and economic crisis, said Natalia Abrams, president of the Student Debt Crisis Center.
Some Democrats have argued that it would be a bad decision for the president to restart student loan payments, which have been paused for nearly two years ahead of a difficult midterm elections year.
The D-N-Y. Rep. Alexandria Ocasio-Cortez, D-N.Y., said last week that it was delusional to believe that Democrats could get re-elected without action on student debt relief.
The moratorium began in March 2020 when President Donald Trump signed into law the CARES Act, which paused payments through Sept. 2020 and eliminated interest rates for the roughly 42 million borrowers.
Trump later took executive action to extend the deferral period through Jan. 2021. Biden signed an executive order that would continue through Sept. 30 on his first day in office.
The moratorium was extended in September by the Biden administration, giving borrowers until January 31 before they had to resume making payments. The Education Department said that it would be the final extension and that it felt a definitive end date would reduce the risk of delinquency and defaults once payments restart.
The moratorium does not apply to borrowers with privately held loans.
The White House said that the Education Department is reviewing Biden's legal authority to wipe out student debt through executive action, but it has not provided a timeline for the review.
Biden said that he does not believe that he can cancel student debt unilaterally, but he would support Congress passing a bill to cancel $10,000 in debt for each borrower.
The Federal Reserve estimated that Americans owed more than 1.7 trillion in student loans in the third quarter of 2021. Students of color are more likely to take on student debt and struggle to pay it back, according to studies. Students who attended for-profit institutions have the highest default rates.