President Biden on Tuesday extended the pandemic-era pause on federal student loan payments as the White House scrambles to salvage its embattled plan to cancel up to $20,000 in debt for millions of borrowers.
The student loan payment pause, which was set to expire on Jan. 1, will now remain in place until 60 days after litigation surrounding the administration’s broader forgiveness plan is resolved or the program is implemented or until June 30 if the courts have not ruled by then.
“Republican special interests and elected officials sued to deny this relief even for their own constituents,” Mr. Biden said in a video post on Twitter. “It isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuit.”
Mr. Biden’s plan to write off billions in student loans has faced a torrent of lawsuits since he announced it in August.
A federal appeals court imposed a nationwide hold on the program last week at the request of six Republican-led states that argued the program threatens future tax revenue and bucks congressional authority to cancel loans.
A federal judge originally rejected the challenge brought by the six states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — saying they lacked standing to pursue the case.
In a six-page ruling, The 8th Circuit’s Court of Appeals blocked the administration’s rollout of the debt forgiveness plan pending an appeal of the decision but did not decide on the program’s legal merit.
A federal judge in Texas also declared the plan unconstitutional in a separate case.
The Biden administration filed documents with the Supreme Court on Friday urging the court to lift the injunction.
“The Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” U.S. Solicitor General Elizabeth Prelogar wrote in the appeal.
White House press secretary Karine Jean-Pierre said last week that the administration remains “confident in our legal authority to provide relief to student borrowers and the president won’t stop fighting for them.”
“We just not going to walk away from it,” she said.
Mr. Biden’s plan would cancel up to $20,000 in student loan debt for Pell Grant recipients and up to $10,000 for others who borrowed using federal student loans. The program is estimated to assist more than 40 million borrowers, the White House has said.
The nonpartisan Committee for a Responsible Budget, which has been critical of Mr. Biden’s student debt forgiveness plan, estimated that extending the pause, which has been in place since March 2020, will cost an additional $40 billion and bring the total cost of the years-long deferment to $195 billion.
“Whether or not the courts allow the Administration to unilaterally cancel $10,000 to $20,000 per person of student debt should have no bearing on whether we should collect the debt that is currently owed,” said CRFB president Maya MacGuineas.
“Continuing the pause won’t make college more affordable. Instead, it will increase inflation, boost the deficit, enhance recession risk, deliver windfall payments to high earners, and further undermine our higher education financing system,” she said.
- Jeff Mordock contributed to this report