Biden aides consider extending student loan freeze after court defeats

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White House officials are considering a suspension of student debt payments after a federal appeals court blocked President Biden’s plan to forgive up to $20,000 in debt per borrower, according to two people with knowledge of the matter.

Biden in August announced that the administration would implement student debt forgiveness while ending a moratorium on student debt payments that had begun 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 issued a 3-0 injunction on Monday preventing the government from proceeding with debt forgiveness, and a Texas judge declared the program illegal in a separate ruling last week.

Appeals Court issues injunction against Biden’s student loan forgiveness

While the Biden administration has vowed to defend the program in court, White House officials have been discussing in recent days the possibility of extending the debt freeze again if they cannot proceed with the president’s original program. Payments would resume on January 1 in conjunction with the loan forgiveness.

No decisions have been made and those briefed on the matter stressed that the talks were preliminary. Those 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 an extension, at least temporarily, would provide some relief to borrowers. It’s unclear whether the president signed off on the idea or was involved in its planning, though senior aides have discussed the move.

“As the legal fragility has become increasingly apparent, the White House has made firmer plans to extend the loan amortization period,” said one of the people familiar with the case. “The extension we’re likely to see is designed to ensure borrowers don’t let the rug be pulled out from under them, rather than an indefinite replacement for loan forgiveness.”

A White House spokesperson declined to comment.

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

Biden’s program would have affected as many as 40 million borrowers and forgiven up to $20,000 in student debt for individuals earning less than $125,000 a year, or less than $250,000 for married couples. The Congressional Budget Office, Congress’s impartial scorer, has estimated that Biden’s plan would cost about $400 billion. The Committee for a Responsible Federal Budget, a DC-based think tank, estimated earlier this year that the debt break will cost about $50 billion a year.

Due to the court’s rulings, the Education Service will no longer be processing concessions. More than half of eligible borrowers have already applied.

Biden’s student loan forgiveness plan is stalled. Can you still apply?

Student debt activists have called on the government to take action to help student borrowers, despite the court’s steps.

Michael Pierce, who served as deputy assistant director of the Consumer Financial Protection Bureau during the Obama administration and is now with the Student Borrower Protection Center, has called on the administration to “make it clear that the student loan system will remain closed as long as as long as these partisan legal challenges continue.” Pierce has said Biden should explore other legal avenues to forgive student debt if the courts reject the path chosen by the administration’s attorneys.

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

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

How President Biden decided to go big on forgiving student loans

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

The administration, meanwhile, has publicly maintained that the program will 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 most needy borrowers recover from the pandemic,” White House press secretary Karine Jean-Pierre said Monday. after the statement in a statement. “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.”


The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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