On Tuesday, November 22, the U.S. Department of Education announced an extension of the pause on student loan repayment, interest, and collections.
The extension will alleviate uncertainty for borrowers as the Biden-Harris Administration asks the Supreme Court to review the lower-court orders that are preventing the Department from providing debt relief for tens of millions of Americans. Payments will resume 60 days after the Department is permitted to implement the program or the litigation is resolved, which will give the Supreme Court an opportunity to resolve the case during its current Term. If the program has not been implemented and the litigation has not been resolved by June 30, 2023 – payments will resume 60 days after that.
“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong,” said U.S. Secretary of Education Miguel Cardona. “I want borrowers to know that the Biden-Harris Administration has their backs and we’re as committed as ever to fighting to deliver essential student debt relief to tens of millions of Americans. We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests.”
On August 24, President Biden and Secretary Cardona announced plans to provide targeted student debt relief to borrowers with loans held by the Department of Education. Borrowers with annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) who received a Pell Grant in college would be eligible for up to $20,000 in debt cancellation. Targeted student debt relief addresses the financial harms of the pandemic, provides borrowers with smooth transition back to repayment and helps borrowers at highest risk of delinquencies or default once payments resume.
To date, over 26 million people have provided the Department with the necessary information to be considered for debt relief, and 16 million borrowers have been approved. But court orders are blocking the Department from discharging student loan debt and accepting additional applications.
Last week, the Department of Justice requested that the Supreme Court lift the lower court’s injunction against the program and suggested that if the Court does not do so, it could take up the student debt relief case, to provide borrowers the clarity and relief they are depending on.
Borrowers can use the additional time to ensure their contact information is up to date with their loan servicers and consider enrolling in electronic debit and income-driven repayment plans to support a smooth transition to repayment. More information can be found at StudentAid.gov.
In addition to providing relief specifically targeted to alleviating the continuing economic effects of the unprecedented COVID-19 pandemic, the Biden-Harris Administration has also taken other steps to support students and borrowers, make higher education more affordable, and improve student loan servicing, including providing nearly $48 billion in targeted loan relief to over 1.8 million borrowers. Actions within that include:
- Revamping the Public Service Loan Forgiveness program in October, which has provided $24 billion in loan relief to 360,000 borrowers. The Department’s Limited PSLF Waiver helped eligible borrower count all prior payments made by student borrowers toward PSLF, regardless of the loan program.
- Giving borrowers with Direct Loans or Department-managed Federal Family Education Loans (FFEL) more credit toward forgiveness. The Department’s one-time account adjustment counts for all months spent in repayment, including payments prior to consolidation and regardless of whether they made partial or late payments or are on a repayment plan toward income-driven repayment (IDR) and PSLF forgiveness.
- Establishing a fair and accessible bankruptcy discharge process to help struggling borrowers discharge their student loans.
- Providing $9.1 billion in relief for 425,000 borrowers who have a total and permanent disability.
- Approving $14.5 billion in borrower defense claims to nearly 1.1 million borrowers, including extending full relief to approved claims and approving new types of claims.
- Providing $1.26 billion in closed school discharges to 107,000 borrowers who attended the now-defunct ITT Technical Institute.
- Restoring eligibility for financial student aid to almost 7.5 million borrowers to help them complete their credential or degree.