Student loans: Democratic lawmakers urge Biden to extend loan repayment moratorium

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Senate Majority Leader Chuck Schumer walks with President Joe Biden after lunch with the Senate Democratic Caucus at the US Capitol in Washington, DC on July 14, 2021. (Jonathan Ernst/Reuters)

More than 90 Democratic lawmakers wrote a letter to President Biden on Thursday calling for an extension of the pause on federal student loan repayments through the end of the year.

House and Senate Democrats signed the letter, including Senate Majority Leader Chuck Schumer of New York, House Majority Whip James Clyburn of South Carolina, Elizabeth Warren of Massachusetts and Pramila Jayapal of Washington. Members of the progressive “Squad” also signed the letter, including Rep. Ayanna Pressley of Massachusetts and Ilhan Omar of Minnesota.

“Given the fast approaching deadline for borrowers to resume payments, your administration must act as quickly as possible to extend the pause and impress upon the American public your intention to cancel a significant amount of student debt. We look forward to helping your administration do just that,” the letter read.

The current extension is set to expire on May 1 after the moratorium on loan repayments was first introduced in early 2020 by the Trump administration in response to the Covid-19 pandemic. The break keeps interest rates at 0% and suspends debt collection efforts. It applies to more than 36 million Americans who have student loans held by the federal government.

President Biden released the latest extension to the moratorium in December, amid concerns about a rise in Covid-19 cases as the highly transmissible variant of Omicron swept across the United States

“We know millions of student borrowers are still dealing with the effects of the pandemic and need more time before payments can resume,” Biden said in a statement at the time.

Now lawmakers have said ‘skyrocketing costs of necessities like food and gas’ will stand in the way of reimbursement, saying “Restarting repayment will financially destabilize many borrowers and their families, and cause hardship for many who cannot afford to repay.

The collective debt of the 36 million debtors amounts to more than $1.37 trillion, according to data from the Ministry of Education. About a third of borrowers are in default or overdue. The average monthly payment is $400.

Education Secretary Miguel Cardona said in December that keeping the policy in place until May would allow for repayment plans tailored to students’ financial needs, such as an income-driven repayment plan.

Cardona said the pause “will provide critical relief to borrowers who continue to face financial hardship due to the pandemic, and allow our administration to assess the impacts of omicron on student borrowers.”

Meanwhile, when the administration extended the pause from September 2021 to January 2021, officials vowed it would be the last extension of the relief.

The group of Democratic lawmakers also called on the president to “cancel student debt now,” arguing that cancellation is “one of the most powerful ways to address issues of racial and economic equity.”

“The student loan system reflects many of the inequalities that plague American society and widen the racial wealth gap. Black students in particular borrow more to go to college, borrow more often while in school, and have a harder time repaying debt than their white peers,” they wrote.

“They are more than three times more likely to default within four years on their federal loans than white borrowers – and face wage garnishment, tax refund withholding and benefit set-offs federal,” the letter adds. “While Latino borrowers often have lower loan balances than their white peers, they are more likely to struggle to repay their loans and have some of the lowest post-school incomes of any racial group or ethnic.”

The White House said last year it had asked Cardona to determine whether Biden had the authority to unilaterally cancel student loans across the board. Progressives have called for Cardona’s memo to be made public.

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