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Education Department urges Biden to extend student loan relief

Some White House advisers support extending relief to give the Department of Education, which is responsible for managing the $ 1.6 trillion federal student loan portfolio, more time to develop a plan to to facilitate the repayment of borrowers, according to people familiar with the discussions. . But other advisers fear that continuing an emergency pandemic relief program through 2022 will undermine the administration’s messages about the strength of the economic recovery.

A few advisers also noted that other pandemic relief measures were coming to an end in the coming months: President Joe Biden said he would allow improved unemployment benefits to expire in September. And the CDC has announced that its “final extension” of the national moratorium on evictions will continue until the end of July. The student loan relief, which Biden extended on his first day in office, is set to expire in late September. But education ministry officials have yet to ask the loan service companies it hires to manage the collections on whether they should consider resuming work in October.

“The break was designed to support borrowers affected by the pandemic and its economic impact,” an administration official said in a statement to POLITICO. “Every day we are making progress on the pandemic and the economy is recovering. We understand that there are still impacts for individual borrowers / families. And ED works to make sure distressed borrowers are taken care of when payments are lifted. “

The administration official said the education ministry “works to ensure distressed borrowers are taken care of when payments are lifted.” A spokesperson for the Ministry of Education declined to comment.

The decision to extend the student loan payment hiatus is also complicated by the larger debate shaking the Biden administration over how to respond to progressive demands for radical student debt cancellation.

Main Democrats in Congress have stepped up calls in recent weeks for the Biden administration to maintain the freeze on student loan repayments until at least March. Consumer groups, as well as major unions, have made similar pleas. They argue that many borrowers are still struggling and fear the administration has yet detailed an outreach plan to help borrowers get back to making monthly payments.

Education Secretary Miguel Cardona has not publicly taken a position on whether to extend the student loan payment hiatus, only saying it was a possibility. “We recognize the impact the pandemic has had on our borrowers,” Cardona said at a Senate hearing last month. “Extending the break is something we’ve had conversations about. “

The CARES Act of March 2020 automatically suspended interest and monthly payments for most federal student loan borrowers. The Trump administration then extended that relief twice in 2020. Biden did the same in January.

The Biden administration also used executive action to expand pandemic relief benefits to an estimated 1 million additional federal student loan borrowers who were excluded from previous relief programs.

Still, student advocacy groups have urged the Biden administration not to resume collecting student loan payments until the Education Department passes a series of system reforms.

“The ministry shouldn’t think about lifting the payment break without fixing its wage garnishment system, moving faster to help defrauded students, and ensuring that thousands of disabled borrowers who are eligible for relief do not. not be recovered, ”said Aaron. Ament, the president of Student Defense, who sued the Trump administration for failing to halt some student loan payments during the pandemic.

Relief from the pandemic saves student loan borrowers about $ 5 billion in interest payments each month, according to the Education Department. Agency staff examined the potential costs of further extending the payment relief, according to a person familiar with the analysis.

Donald Trump’s Education Department in a report described the potential restart of payments as a “heavy burden” on the department. The report also predicted an increase in delinquencies when payment relief expires.

Biden has said he opposes the most radical progressive proposals to write off $ 50,000 in student loan debt per borrower through executive action. But the White House has tasked the education and justice departments to examine options for using executive action to provide some student debt relief. He has not yet made a final decision on the matter.

Some progressives pushing for an extension of student loan relief hope it is a prelude to the widespread student loan debt cancellation they seek.

But it’s not just the most progressive MPs who fear sending student loan bills to their constituents in the coming months. Senator Kyrsten Sinema (D-Ariz.), A moderate, signed a letter with Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren (D-Mass.) Calling for an extension of the relief on monthly payments at least until next March or until the economy improves further.

“We call on the administration to extend the hiatus on student loan payments to help support Arizona families as we continue our recovery from coronaviruses,” Sinema said on Twitter Tuesday. “Extending the current hiatus on federal student loan payments will provide relief to Arizonans and help them continue to recover from the coronavirus recession.”

Chairs of Congressional education committees, who have been more cautious in their calls for student debt relief than other Democrats, have also urged the White House to pursue relief “once more” until ‘in “early 2022”.

Senator Patty Murray (D-Wash.) And Rep. Bobby Scott (D-Va.) Said in a letter to Biden that the additional time would allow the Department of Education to provide borrowers with “an efficient return to repayment. “.

GOP leaders on education policy in Congress, meanwhile, said it was time for the federal government to resume collecting monthly payments, citing the cost to taxpayers of withholding loans.

Sen. Richard Burr (RN.C.) and Representative Virginia Foxx (RN.C.), senior members of Congressional education committees, said the Biden administration should avoid a further extension of relief .

Some private players in the student loan industry are also hoping the education ministry will activate payments this fall, at least for some borrowers.

The American Fintech Council, whose members include SoFi, Earnest, owned by Navient, and other student loan refinancing companies that compete with federal student loans, calls on the Biden administration to avoid another “blanket extension” Of relief.

Earlier this month, the group urged the administration to provide “relief to those in need” while restarting payments “for those who can meet their obligations.”

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