President Joe Biden announced Tuesday that his administration will extend the moratorium on federal student loan payments while the White House wages a legal battle to save his plan to write off some of the debt. .
In a video posted on Twitter, Biden said, “It is not fair to ask the tens of millions of eligible borrowers to resume paying their student loans while the courts review the case. No,’ he said.
The moratorium was set to expire on Jan. 1, a date set by Biden, before the debt forgiveness plan stalled in the face of legal challenges from conservative opponents. rice field.
It is currently extended to 60 days after the case is settled. If the lawsuit she does not settle by June 30, payments will resume 60 days after that.
Biden’s plan promises $10,000 in federal student debt relief for anyone earning less than $125,000 or for households earning less than $250,000. Pell grant recipients who typically demonstrate greater financial need are eligible for an additional $10,000 of her relief.
More than 26 million people have already applied for relief and 16 million have been approved, but the Ministry of Education Stopped processing applications for the current month After a federal judge in Texas ruined the plan.
The Justice Department last week asked the Supreme Court Investigate the matter and revive Biden’s debt forgiveness plan. By extending the moratorium, the administration said it would give the courts a chance to settle the case in its current term.
Biden said Tuesday, “I am absolutely convinced that my plan is legal.
President Joe Biden’s plan to offer up to $20,000 in student loan forgiveness to millions of borrowers is now on hold after a US judge in Texas blocked the plan on Friday. The Insider’s Ayelet Sheffey joins LX News to discuss what happens next for borrowers.
Biden announced the decision a day after more than 200 advocacy groups called for the moratorium to be extended, warning that starting payments in January would create a “financial catastrophe” for millions of borrowers. did.
The White House has argued in court that Americans continue to feel the economic stress of the pandemic. there is a possibility.
The biggest risk is about 18 million borrowers who were told their entire loan balance would be canceled. Even if payments resume, these borrowers may assume everything is fine and ignore the bill, the education ministry warned.
But at the same time, the White House has warned that extending the payment moratorium will cost billions of dollars in lost revenue each month. suffer interest losses.
The Biden administration didn’t mention costs in its announcement, but instead blamed Republicans for disputing the plan.
Secretary of Education Miguel Cardona said, “The cold-hearted efforts to block student debt relief in the courts are the same as trying to pay for a household or plan vacations without a clear picture of student debt obligations.” It’s causing enormous financial anxiety for millions of borrowers who can’t even afford it.
“That’s plain wrong,” he added.
Critics such as the Committee for a Responsible Federal Budget oppose any further extension, saying it could exacerbate inflation and increase the risk of a recession.
But supporters of Biden’s plan praised the move, saying it would provide a cushion for working-class Americans.
“This extension means that borrowers in distress will be able to keep food on the table during the holiday season and in the months to come. We will do everything we can to defeat the attack,” said Mike Pierce, executive director of the Student Borrower Protection Center.
Even before Mr. Biden took office, the legality of canceling student debt was questioned. Proponents argue that federal law already gives the Department of Education broad flexibility to cancel student loans, while opponents argue that only Congress has the power to cancel debt of that magnitude. There is
In announcing that plan, the Biden administration invoked the HEROES Act of 2003. Act of 11 November 2001, aimed at supporting members of the Armed Forces. The Justice Department said the law provides broad powers to write off student debt during a national emergency. Biden said relief is needed to help Americans recover from the pandemic.
A federal judge in Texas earlier this month denied Biden’s rationale for overpowering him. The HEROES Act “does not give the executive branch explicit congressional approval to create a $400 billion student loan forgiveness program,” wrote District Court Judge Mark Pittman, who was appointed by former President Donald Trump. there is
The Justice Department is asking the New Orleans Court of Appeals to stay Pittman’s order while the administration appeals. I’m here. thwarted Biden’s plan In response to lawsuits from six Republican-led states.