clock menu more-arrow no yes mobile

Filed under:

The Trump administration extends the freeze on student loan payments through January

Biden and Congress will have until January 31, 2021 to decide how to help over 40 million student loan borrowers.

DeVos, in black rimmed square glasses, shoulder length blonde hair, a blue suit, and a blue, white, and red silk scarf, smiles slightly. A blurry crowd is behind her.
Education Secretary Betsy DeVos arrives at the White House for a 2019 Hanukkah reception.
Brendan Smialowski/AFP/Getty Images

Education Secretary Betsy DeVos has extended the pause on federal student loan payments due to the coronavirus pandemic through the end of January.

The freeze on monthly payments and the accrual of interest on loans had been set to expire at the end of December, but Democrats and consumer advocacy groups had called for an extension, arguing that repayments should not begin again amid the presidential transition and that they should stay suspended, due to uncertainty over when another coronavirus relief bill may be passed by Congress.

“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted,” DeVos said in a statement Friday. “The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate. The Congress, not the executive branch, is in charge of student loan policy.”

Student loan relief — which began in March through the CARES Act, and was then extended by the Trump administration — has provided relief to over 40 million Americans as the coronavirus pandemic has wreaked havoc on the economy, and put a strain on household incomes across the nation. And the economic picture appears unlikely to brighten soon — more than 5.8 million people are unemployed, and a new federal jobs report found job creation slowing.

The student loan freeze has modestly improved credit scores of student loan borrowers and helped borrowers in default avoid penalties for non-payment, such as wage garnishment, according to the Urban Institute.

While DeVos called on Congress to take action on relief, both the executive and legislative branches of government have options available for extending relief.

As Politico reports, the coronavirus relief bill passed by House Democrats in May would keep the freeze in place until September 30, 2021, unless the unemployment rate improves. And a bipartisan bill unveiled in the Senate this week potentially offers some kind of relief on payments through March.

When President-elect Joe Biden takes office, he will have the option to extend the repayment moratorium through executive action just as the Trump administration did. But Democratic leaders, progressives, and many consumer advocacy groups are pushing for much more sweeping action on loan relief during Biden’s tenure: the outright cancellation of federal student loans.

Student loan cancellation is a hot policy debate on the left

Some progressives, like Sen. Elizabeth Warren (D-MA), have argued that the Higher Education Act gives the education secretary the “authority to begin to compromise and modify federal student loans,” meaning that the president has the legal power to cancel student loan debt unilaterally.

As Vox’s Dylan Matthews has reported, Senate Minority Leader Chuck Schumer and Warren have called on the Biden administration to use executive authority to forgive the first $50,000 in debt for every borrower with federal student loans. (Federal student loans make up over 92 percent of outstanding student loan balances, as opposed to privately issued loans.)

Biden has preferred more modest cancellation measures. He has expressed support for far more limited student loan relief — forgiving $10,000 per borrower — but sources involved in his transition planning discussions told the New York Times that he prefers any cancellation measure to be authorized through congressional legislation, not executive action.

If Democrats succeed in taking control of the Senate after Georgia’s two runoff elections — and therefore hold both chambers of Congress — there may be some more serious discussion of doing just that. But if Democrats fail to take control of the Senate in January’s runoffs, pressure on Biden to take executive action to forgive loans may intensify.