Biden administration expanding pause on student loan interest and collections

The Biden administration is expanding the pause on student loan interest and collections to the more than a million borrowers who are in default on loans made by private lenders, White House press secretary Jen Psaki said Tuesday.

“This step particularly protects 800,000 borrowers who are at risk of having their tax refunds seized,” Psaki said at a White House briefing.

The pause on collections covers loans made as part of the Federal Family Education Loan Program. It does not apply to borrowers who are not in default.

Biden has resisted calls from top congressional Democrats — including Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren — to use his executive authority to forgive $50,000 in federal student loan debt per borrower.

But Biden, who has said he would support canceling $10,000 per borrower, has repeatedly argued that the government shouldn’t forgive debt for people who went to “Harvard and Yale and Penn.” He’s also indicated that he believes Congress should make changes through legislation, which would make them harder to undo, though Psaki said Tuesday that the White House is “still taking a closer look at our options on student loans.”

“This includes examining the authorities we have, the existing loan forgiveness programs that are clearly not working as well as they should,” Psaki said.

Psaki continued: “This includes borrower defense, total and permanent disability charges, there’s a lot of steps we’re looking at and we’ll continue to review those and be in touch of course with Leader Schumer about our process.”

A broad cancellation of federal student loan debt would be unprecedented. But a memo from lawyers at Harvard’s Legal Services Center and its Project on Predatory Student Lending says the Department of Education has the power to do so.

The department already has some more targeted debt cancellation policies in place. It wipes away debt for defrauded students as well as disabled veterans. Biden could provide relief for hundreds of thousands of more borrowers just by expanding those programs, according to the National Student Legal Defense Network.

In one of his first acts in office, Biden extended the pause on student loan payments and interest, a Covid relief benefit put in place by Congress last year that had already been renewed by the Trump administration. Federal student loan borrowers won’t have to make payments until October 1 at the earliest.

And the administration earlier this month reversed a controversial Trump-era policy that will lead to the cancellation of roughly $1 billion in student debt for borrowers who were defrauded by their colleges.

The change will deliver full loan forgiveness to 73,000 people who were deemed eligible for the relief under former Education Secretary Betsy Devos but received only partial loan forgiveness after she changed the cancellation calculation.

Last week, the administration waived a paperwork requirement during the pandemic for disabled borrowers to receive approval for loan forgiveness. But advocates say much more could be done to help these borrowers, like automatically discharging their debt.