While the Biden administration has vowed to defend the plan in court, White House officials have discussed in recent days that they could extend the debt freeze again if they fail to move forward with the president’s original plan. Payments were originally scheduled to resume in January. 1 Combined with loan forgiveness.
No decision has been made, and people briefed on the matter stressed that the talks are preliminary. The people spoke on condition of anonymity to discuss earlier private talks. The moratorium is not expected to be extended indefinitely under Biden, but at least a temporary extension would provide some relief for borrowers, the people said. It is unclear whether the president has signed off on the idea or participated in the plan, although senior aides have discussed the move.
“The White House has been developing increasingly firm plans to extend the moratorium on loan repayments as legal loopholes become more apparent,” said a person familiar with the matter. “The deferrals we’re likely to see are to make sure borrowers don’t pull the rug from under them, not to replace loan forgiveness indefinitely.”
A White House spokesman declined to comment.
A Biden administration could face a serious political challenge if courts insist on scrapping the plan, which Republican lawmakers have insisted violates congressional spending powers.
Biden’s plan would affect up to 40 million borrowers and cancel up to $20,000 in student debt for individuals earning less than $125,000 a year or married couples making less than $250,000. The Congressional Budget Office, the nonpartisan scorer in Congress, estimates that Biden’s plan would cost about $400 billion. The Washington-based think tank, the Responsible Federal Budget Committee, estimated earlier this year that the debt moratorium would cost about $50 billion a year.
Due to the court ruling, the Department of Education is no longer accepting applications for relief. More than half of eligible borrowers have signed up.
Despite the court action, student debt activists are calling for government action to help student borrowers.
Michael Pierce, deputy assistant director of the Consumer Financial Protection Bureau during the Obama administration and now with the Center for Student Borrower Protection, called on the administration to “make it clear that the student loan system will remain closed for as long as these partisan legal challenges persist.” Pierce Said Biden should explore other legal avenues to cancel student debt if the court rejects the debt selected by government lawyers.
“I think it’s the bare minimum,” Pierce said of a potential extension to the timeout. “The fate of borrowers is in Biden’s hands.”
Conservatives are likely to slam any extension of the moratorium since President Donald Trump began implementing it in March 2020. Many economists prefer Biden’s debt cancellation plan to the moratorium, in part because debt cancellation only applies to household incomes below a certain year, while debt moratoriums are universal and help wealthy borrowers who can afford to keep paying people.
“It seems like a clumsy way of trying to do student loan bailouts, but it’s far less efficient — it’ll benefit nearly everyone, including the wealthiest borrowers,” said Brian Ree, a policy analyst at the Manhattan Institute. Del said he was a libertarian. think tank. “And it’s still a long way from the original point of the pause, which was mass unemployment and recession now long gone.”
Meanwhile, the government has publicly maintained that the plan will be confirmed by the courts.
“We have full confidence in the legal authority of the student debt relief program and see the need to help borrowers most in need emerge from the pandemic,” White House press secretary Karin Jean-Pierre said in a statement after the ruling Monday. “The administration will continue to fight these baseless lawsuits from Republican officials and special interest groups, and will never stop supporting the struggles of America’s working and middle classes.”