The U.S. government will be freezing student loan repayments once again. The freeze is the sixth extension of the White House’s pandemic relief program, likely to affect tens of millions of borrowers in the U.S.
The freeze began in March 2020, under former President Trump, as part of Congress’s CARES Act and was extended twice by the Trump administration.
According to several administration officials, President Biden will announce that millions of borrowers will be able to freeze their student loan payments until August 31, with student loans taking the average graduate around 40 years to pay off. This latest freeze would be the sixth occasion since the pauses began early in the pandemic, with payments scheduled to restart in less than a month.
A report published by the Committee for a Responsible Federal Budget found the pause in interest and payments will result in debt relief equivalent to an average of $5,500 per borrower, with the pause reportedly costing the government roughly $4 billion each month.
Earlier this week, the N.A.A.C.P.’s National Director of Youth and College, Wisdom Cole, stated that student loan debt was a “racial and economic justice issue that stains the soul of America.”
“With each and every repayment extension, you make a stronger case for canceling it. At this point, just cancel it.” Mr. Cole said.
Mr. Cole is not alone in his opinion, with this view shared by several members of Biden’s Democrat Party, including Senor Chuck Schumer and Representative Ayanna Pressley.
Americans currently own $1.6 trillion in federal student loans, with the amount of debt outstanding higher than on credit cards, car leases, or any other consumer debt, except mortgages.
While President Biden has resisted conversations on entirely canceling student debt through an executive order, instead, Biden has urged Congress to pass legislation that cancels $10,000 per borrower. It remains a poignant topic of conversation, especially concerning the upcoming midterm elections.
The sixth push will come as further confusion for debt-cancellation advocates in the U.S., torn between optimism and frustration, with Natalia Abrams, founder of the Student Debt Crisis Center, arguing that “If they’re not going to do it, that gives false hope to borrowers.”
With inflation at its highest in the last 40 years, the extension will likely allow able consumers to hold onto the money they can spend. As a result, this poses a further challenge for the U.S. economy, with strong consumer demand colliding with constrained supply chains and labor shortages.
Recent pollings conducted by Protect Borrowers concluded that nearly 66% of likely voters support the president forgiving student debt, with more than 70% of Latino and Black voters in favor.
As the U.S. approaches the upcoming midterm elections, we will see growing pressure on President Biden, both within his party and externally, to cancel up to $50,000 of student debt per individual.
