Biden moves forward with February 2022 resumption of student loan repayments
The Biden administration has reiterated that it will not extend the current student loan payment hiatus beyond February 1, 2022, despite the continued spread of COVID-19 and the arrival of the more infectious Omicron variant of the coronavirus.
Asked last Friday about any possibility of an extension of the break, White House Press Secretary Jen Psaki said the administration “is still assessing the impact of the Omicron variant”, but that a high priority is ” a smooth transition to reimbursement “.
Making it clear that the administration had in fact made up its mind on the matter, Psaki went on to say, âIn the coming weeks, we will be releasing more details on our plan and engaging directly with student loan borrowers to make sure. that they have the resources they need and are in the proper repayment plan.
In August, the White House announced its “final extension” of the payment hiatus on federal student loans that began under the Trump administration in March 2020. The program froze loan balances and halted payments due and outstanding. accrued interest. The policy also put on hold all collection, garnishment and interception of tax refunds on delinquent loans.
The combined federal and private debt in the United States is estimated at $ 1.6 trillion. There are 42.2 million people with federal student loan balances. According to a household debt study by NerdWallet, the average American household with student loans owes around $ 57,500 and the average debt ranges from $ 28,950 for a bachelor’s degree to $ 183,302 for students with a veterinary degree.
Like all pandemic relief programs contained in the $ 2.2 trillion CARES law passed in March 2020 with overwhelming bipartisan support, the student loan payment hiatus was fundamentally aimed at protecting the financial interests of the elite. leader. Fully aware that the economic impact of the pandemic would mean tens of millions of borrowers would not be able to make payments, Democrats and Republicans acted to prevent a wave of catastrophic defaults that could threaten l entire capitalist financial system.
It was against this backdrop that a group of leading Congressional Democrats submitted a letter to the White House urging President Biden to reconsider his plan to revive loan repayments within two months.
In their December 8 letter, Senators Elizabeth Warren of Connecticut and Charles Schumer of New York and Representative Ayanna Pressley of Massachusetts state: Plan, and causing unnecessary pain and stress to American families, we urge you to extend the break on student loan payments and interest and to take action to cancel student debt. “
The trio based their call to the White House on an analysis by the Democratic Party-affiliated Roosevelt Institute on the economic impact of forcing borrowers to resume student loan payments on February 1, 2022. According to the study, if the resumption of payments is implemented, “$ 85.48 billion per year will be cut from the budgets of 18,125,800 student loan borrowers.”
In addition, the Roosevelt Institute claims that the income retained by borrowers during the repayment break improved their “economic security” and, most importantly, “injected necessary consumer spending into communities during the pandemic, complementing monetary policies and taxes designed to prevent the US economy from sliding into an unnecessarily lengthy recession.
In other words, the proposal to extend the payment break, along with the proposal to write off up to $ 50,000 in student debt per borrower, aims to “put billions of dollars back into our national economy a year.” and not to tackle the imposition of the financial burden of higher education on the public which is a hallmark of American capitalist society.
Expressing opposition within the ruling establishment to Warren, Schumer and Pressley’s proposal, Forbes published an article on Dec. 7 titled “No, Biden Won’t Extend Student Loan Relief.” “
Senior contributor Zack Friedman wrote: âThese senators know that the Biden administration is unlikely to extend student loan relief indefinitely. A precedent suggests that if there was an extension, it would be date specific. Previously, members of Congress had requested specific extensions beyond January 31, 2022, including extensions to March 31, 2022 and September 30, 2022. For some reason, this letter does not have a specific date.
Right-wing Republican Party politicians are using the discussion of the student loan crisis as an opportunity to completely attack financial aid programs. the the Wall Street newspaper quoted a congressional aide who noted that the response from several Republicans was to say of college graduates who earn modest incomes while carrying massive debt, “Why are they able to borrow so much if they can only earn that much? “
Other anonymous Republicans, the Newspaper said “largely in favor of reducing the role of government in funding student loans.” Former Federal Student Aid office chief operating officer A. Wayne Johnson, who is now a Republican campaigning for a US Congressional seat in Georgia, called the Federal Student Loan Plus program “a train in the making.” leak “.