Biden aides are considering extending a student loan freeze after judicial defeats

Suspension

White House officials are considering extending a student debt moratorium after a federal appeals court blocked President Biden’s plan to cancel up to $20,000 in debt for each borrower, according to two people familiar with the matter.

In August, Biden announce That the administration will implement student debt relief while at the same time 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 US Court of Appeals for the Eighth Circuit, by a vote of 3-0 on Monday, issued an injunction preventing the administration from moving forward with a debt discharge, and a Texas judge last week declared the program illegal in a separate ruling.

Appeals court grants injunction against Biden’s student loan forgiveness

Despite the Biden administration’s pledge to defend the program in court, White House officials have in recent days discussed the possibility of extending the debt freeze again if they cannot move forward with the president’s initial program. Payments were to resume on January 1 in conjunction with the loan forgiveness.

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 early private conversations. People said the moratorium is not expected to be extended indefinitely during the Biden term, but extending it at least temporarily would provide some relief for borrowers. It is not clear if the president approved of the idea or was involved in the planning, though his top aides have discussed the move.

“As the legal vulnerabilities become more apparent and apparent, the White House is making increasingly aggressive plans to extend the loan standstill,” said one person familiar with the matter. “The extension we are likely to see is aimed at making sure 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 tough political challenge if the courts continue to strike down the program, which Republican lawmakers have asserted is an unconstitutional violation of congressional spending power.

Biden’s program would have affected up to 40 million borrowers and canceled up to $20,000 in student debt for individuals earning less than $125,000 a year, or less than $250,000 for married couples. The Congressional Budget Office, the nonpartisan results monitor in Congress, has estimated that Biden’s plan will cost about $400 billion. The Committee for a Responsible Federal Budget, a Washington-based think tank, estimated earlier this year that a temporary debt moratorium costs about $50 billion annually.

The Ministry of Education no longer accepts requests for relief due to court rulings. More than half of eligible borrowers have already signed up.

Biden’s student loan forgiveness plan has been blocked. Can you still apply?

Student debt activists have called on the administration to take action to help student borrowers despite court moves.

Michael Pierce, who served as deputy assistant director of the Office of Consumer Financial Protection during the Obama administration and is now at the Center for Student Borrower Protection, called on the administration to “make it clear that the student loan system will remain closed because as long as these partisan legal challenges persist.” Pierce said Biden should explore other legal avenues to clear student debt if the courts reject the course chosen by administration lawyers.

“I think that’s the minimum,” Pearce said of the possible extension of the moratorium. “The fate of borrowers is in Biden’s hands.”

Conservatives would likely blow up any extension of the moratorium, which has been in place since President Donald Trump began it in March 2020. Many economists favor Biden’s plan for debt cancellation over a moratorium, in part because debt cancellation only applies to families with fewer She is about a certain year old. Income, while debt deferment is universal and helps wealthy borrowers who can continue to make payments.

How President Biden decided to move forward with student loan forgiveness

“This seems like a frantic way to try to bail out a student loan, but it’s much less efficient — it will benefit almost everyone, including the most affluent borrowers,” said Brian Riddell, a policy analyst at the Manhattan Institute who is libertarian. Think tank. “And this is a far cry from the original point of the comment, which is mass unemployment and a recession that is now long over.”

Meanwhile, the administration has publicly maintained its belief that the program will be approved by the courts.

“We are confident in our legal authority for the Student Debt Relief Program and believe it is essential to assist borrowers most in need as they recover from the pandemic,” White House press secretary Karen Jean-Pierre said in a statement Monday after the ruling. “The administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting in support of middle and working class Americans.”

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