Why the White House might extend the payment break for student borrowers

US President Joe Biden.

Kevin Lamarque | Reuters

Recent news that the White House is considering extending the payment pause for student borrowers has once again surprised some.

The Biden administration has pushed for bills to resume in May, pointing out that the economy is enjoying a historic recovery.

However, restarting payments for the tens of millions of Americans on student loans after more than two years of hiatus will be logistically and politically complicated, experts say. As a result, borrowers may not have to worry about payments for several months.

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Here are a few reasons why another expansion might be coming.

1. Biden is still weighing student loan forgiveness

White House Chief of Staff Ron Klain said earlier this month that the Biden administration wanted to make its decision on debt cancellation before reactivating payments.

“The president is going to look at what we should do on student debt before the break expires, or he’ll extend the break,” Klain said on the “Pod Save America” ​​podcast.

The administration may delay payments because it is not ready to announce its pardon plan.

During the campaign trail, President Joe Biden promised to quickly write off $10,000 per borrower, but he’s coming under increasing pressure from some Democrats and advocates to cut more. Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Elizabeth Warren, D-Mass., are pushing him to rescind up to $50,000 for all.

Taking over bills and then later reducing or clearing people’s loan balances can be confusing, said higher education expert Mark Kantrowitz.

“Ideally, if the federal government were to cancel some student loans, they would want to do so before the payment pause and interest relief expired,” he said.

But, more than that, Kantrowitz said, “the reasons for a further extension are politically driven, not politics.”

He continued, “Restarting repayment without forgoing student loans will provide progressives with another opportunity to criticize the Biden administration.”

2. Mid-term reviews are approaching

At this point, some Democrats and advocates have said resuming student loan payments before the midterm elections in November could hurt Democrats on the ballot.

“Starting student loan repayments again just before a midterm election is politically silly,” said Luke Herrine, former legal director of advocacy group The Debt Collective, a national debtors’ union.

The Government Accountability Office found that up to half of people with federal student debt may be at increased risk of delinquency when payments resume, something the Biden administration probably doesn’t want to see in the headlines as election day approaches.

A recent poll found nearly two-thirds of likely voters support Biden canceling some or all of the student debt, with more than 70% of Latino and black voters in favor.

3. Multiple loan servicers change

Three companies that handled federal student loans — Navient, the Pennsylvania Higher Education Assistance Agency (also known as FedLoan), and Granite State — all recently announced they would end their relationship with the government.

As a result, approximately 16 million borrowers will have their accounts transferred to another company.

These transitions are still ongoing and extending the pause may give government and services more time to prepare for the resumption of payments.

“Changing a borrower’s loan servicer and starting repayment again at around the same time can contribute to borrower confusion,” Kantrowitz said.

Correction: Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Elizabeth Warren, D-Mass., are pushing President Biden to rescind up to $50,000 for all. An earlier version distorted the figure.

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