Student-loan payments resume in 2 months as Biden nears a decision on federal debt cancellation

·3 min read
US President Joe Biden looks on prior to a signing ceremony in the East Room of the White House in Washington, DC, on May 25, 2022.
US President Joe Biden looks on prior to a signing ceremony in the East Room of the White House in Washington, DC, on May 25, 2022.JIM WATSON/AFP via Getty Images
  • Student-loan payments are set to resume in two months, after August 31.

  • Before the resumption, Biden is expected to cancel some student debt for many federal borrowers.

  • Advocates want a pause extension to ensure cancellation is fully implemented before payments resume.

Federal student-loan borrowers have two more months of relief before they are hit with another monthly bill.

President Joe Biden's fourth extension of the student-loan payment pause, through August 31, was intended to give borrowers a break amid the pandemic and soaring inflation. With that deadline just 60 days away, the administration has not given a firm indication of another extension of that pause — and it's looking more likely that broad student-loan forgiveness will happen first.

Recent reports indicated Biden is considering $10,000 in relief for federal borrowers making under $150,000 a year, and while that amount has not been confirmed by the White House, the president is expected to announce his final decision in July or August, prior to the payment resumption. But some advocates are worried payments will resume before debt cancellation is fully implemented.

"A hasty restart of payments now, in this time of rising costs, and while thousands are still waiting for their loan forgiveness applications to be processed, would be devastating," American Federation of Teachers President Randi Weingarten said in a statement. "This is no time to shift the burden of a broken student loan system onto the backs of working people."

If the debt cancellation is subject to income thresholds, it's likely the borrowers will have to take some action on their part, either by applying for the relief themselves or filling out paperwork to verify their incomes, and as Insider previously reported, it could be a burdensome task in which simple errors could easily be made, blocking debt cancellation from those who need it the most.

Lawmakers on both sides of the aisle have also expressed concerns with the lack of information surrounding both a possible payment pause extension, and Biden's nearing decision on broad loan forgiveness. Top Republican on the House education committee Virginia Foxx wrote a letter to Education Secretary Miguel Cardona requesting additional information on any forthcoming relief plans, and how the department is planning to carry them out.

"You said you are ready to act on student loan forgiveness, but you can only be ready if you know the plan; therefore, please describe, what is this plan?" Foxx wrote.

Minnesota Rep. Ilhan Omar later led dozens of her Democratic colleagues in sending a similar letter to Cardona to ensure "ability to deliver debt cancellation quickly and efficiently, no matter the effort and resources required."

The most the public knows now is that a payment pause extension could, or could not, happen. Cardona told lawmakers in June that "it could be that it's extended."

"Or it could be that it starts there," he said. "But what I will say is that our borrowers will have ample notice. And we'll communicate that with you as well."

Read the original article on Business Insider