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Biden aides consider extending student loan freeze after court defeats

Biden aides consider extending student loan freeze after court defeats

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White House officials are considering extending the pause for student debt repayment after a federal appeals court blocked it President Biden’s plan to cancel up to $20,000 of debt per borrower, according to two people with knowledge of the matter.

In August, Biden announced that the administration will implement student debt forgiveness while also ending the student debt repayment moratorium that began during the pandemic. But Biden’s plan has so far been thwarted in the courts. The U.S. Court of Appeals for the 8th Circuit, in a 3-0 vote on Monday, issued an injunction preventing the administration from continuing to repay the debt, and a Texas judge ruled the program illegal in a separate ruling last week.

Appeals court issues injunction against Biden’s student loan forgiveness

Although the Biden administration has promised to defend the program in court, White House officials have discussed in recent days the possibility of extending the debt freeze again if they are unable to continue with the president’s initial program. Payments are scheduled to resume on January 1 in connection with the loan forgiveness.

No decisions have been made, and the insiders emphasized that the talks were preliminary. The people spoke on condition of anonymity to discuss early private conversations. The moratorium is not expected to be extended indefinitely during Biden’s term, the people said, but extending it at least temporarily would provide some relief to borrowers. It’s unclear whether the president signed off on the idea or was involved in the planning, though senior aides have discussed the move.

“As the legal vulnerability became clearer and clearer, the White House got tighter with plans to extend the loan repayment pause,” said one of the people familiar with the matter. “The extension we’re likely to see is intended to ensure borrowers don’t have the rug pulled out from under them, rather than being an open-ended substitute for loan forgiveness.”

A White House spokesman declined to comment.

The Biden administration could face a tough political challenge if the courts persist in striking down the program, which Republican lawmakers say is an unconstitutional violation of Congress’s spending authority.

Biden’s program would affect as many as 40 million borrowers and cancel up to $20,000 of student debt for individuals making less than $125,000 a year, or less than $250,000 for married couples. The Congressional Budget Office, the nonpartisan congressional recorder, is estimated that Biden’s plan would cost roughly $400 billion. The Committee for a Responsible Federal Budget, a DC-based think tank, estimated earlier this year that the debt break costs roughly $50 billion a year.

Department of Education no longer accepts requests for relief due to court decisions. More than half of eligible borrowers have already applied.

Biden’s student loan forgiveness plan has been blocked. Can you still log in?

Student debt activists urged the administration to take action to help student borrowers despite the court’s moves.

Michael Pierce, who served as deputy assistant director of the Consumer Financial Protection Bureau during the Obama administration and is now at the Student Borrower Protection Center, called on the administration to “make it clear that the student loan system will remain shut down because as long as these partisan legal challenges continue.” Pierce said Biden should explore other legal avenues to cancel student debt if courts reject the one chosen by administration lawyers.

“I think that’s the bare minimum,” Pierce said of a potential moratorium extension. “The fate of borrowers is in Biden’s hands.”

Conservatives are likely to veto any extension of the moratorium, which has been in place since President Donald Trump began it in March 2020. Many economists prefer Biden’s debt relief plan to the moratorium, in part because the debt relief applies only to families below a certain annual income, while the debt moratorium is universal and helps wealthy borrowers who can afford to keep paying.

How President Biden decided to go big on student loan forgiveness

“This seems like a reckless way to try to save student loans, but far less effective — it would benefit virtually everyone, including the wealthiest borrowers,” said Brian Riedl, a policy analyst at the libertarian-leaning Manhattan Institute. think tank. “And it’s so far from the original point of the moratorium, which was mass unemployment and a recession that’s long gone now.”

The administration, meanwhile, remained publicly confident that the program would be upheld by the courts.

“We are confident in our legal authority for the student debt relief program and believe it is necessary to help the neediest borrowers as they recover from the pandemic,” White House Press Secretary Karine Jean-Pierre said in a statement Monday after the ruling. “The administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle-class Americans.”





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