The Biden administration has vowed to defend the program in court, but White House officials recently discussed the possibility of extending the debt freeze again if the president’s first program fails to proceed. With the exemption, it was scheduled to reopen on January 1.
No decision has been made, and those briefed on the matter stressed that the conversation was tentative. The moratorium isn’t expected to be extended indefinitely during Biden’s term, but extending it at least temporarily would provide some relief to borrowers, according to Reuters. It’s unclear if the president approved the idea or was involved in the planning, but a senior aide is discussing the move.
“The White House has a more robust plan to extend the moratorium on loan payments as the legal vulnerabilities become more apparent,” said a person familiar with the matter. “The extensions we are likely to see are aimed at keeping borrowers from having their rugs pulled out, 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 courts continue to reject the program.
Biden’s program affected as many as 40 million borrowers and canceled up to $20,000 in student loans for individuals earning less than $125,000 a year, or less than $250,000 for couples. Congress’s bipartisan scorekeeper, the Congressional Budget Office, estimates that Biden’s plan will cost about $400 billion. The Committee for a Responsible Federal Budget, a DC-based think tank, estimated earlier this year that debt suspension would cost about $50 billion annually.
The Department of Education is not accepting applications for relief due to court rulings. Over half of eligible borrowers have already signed up.
Student debt activists are calling for the government to take action to help student borrowers despite the court’s move.
“We urge the administration to make it clear that the student loan system will remain closed,” said Michael Pearce, deputy director of the Consumer Financial Protection Bureau during the Obama administration and now with the Center for Student Borrower Protection. As long as these partisan legal challenges persist.” Mr. Pierce said Mr. Biden has no other laws to cancel student debt if the court rejects the government lawyer’s choice. He said we should look for alternatives.
“I think it’s the bare minimum,” Mr. Pierce said of a possible extension of the moratorium. ‘The borrower’s fate is in Biden’s hands’
Conservatives are likely to denounce the extension of the moratorium since President Donald Trump initiated it in March 2020. Many economists prefer Biden’s debt forgiveness plan to the moratorium. The moratorium is universal and helps wealthy borrowers who can afford to keep paying.
Brian Riedl, a policy analyst at the libertarian-leaning Manhattan Institute, said, “While this seems like an unfair way of trying to bail out student loans, it’s far less efficient. In effect, including the wealthiest borrowers. It will benefit everyone,” he said. think tank. “And that’s a far cry from the moratorium’s original point of mass unemployment and recession.
Meanwhile, the administration publicly maintains the belief that the program will be confirmed by the courts.
“We are confident in the legal mandate of the Student Debt Relief Program and will continue to help borrowers most in need as they recover from the pandemic,” White House Press Secretary Carine Jean-Pierre said in a statement Monday after the ruling. “The administration will continue to fight these baseless lawsuits by Republican officials and special interest groups, and stop fighting to help working and middle-class Americans.” There is none.”
