Time is running out as student loan borrowers barrel towards August 31, a critical date on multiple fronts.
August 31 is also the informal deadline for Biden to make a decision on enacting broad student loan forgiveness. Biden hedged for over a year about using executive action to enact wide-scale student loan cancellation, hoping that Congress would pass legislation instead.
After Congressional action seemed increasingly less likely, Biden suggested last spring that he was considering using executive action to wipe out at least some student debt. But he has since delayed his decision. Most recently, Biden said he would make up his mind by the end of August 2022.
The month of August may effectively also be the final opportunity for some borrowers to take advantage of a temporary expansion of the Public Service Loan Forgiveness (PSLF) program, which is set to end in October 2022.
Next year in August, around August 30, 2023, unless courts rule on student loan relief lawsuits sooner, is the expiration date of President’s Biden’s most recent extension of the ongoing student loan pause, which has suspended payments and interest on government-held federal student loans for nearly 30 months.
Advocates are turning up the pressure. Here’s the latest.
Democrats in Congress urge Biden to extend student loan pause
Last week, over 100 Democrats in the House and Senate, led by Senate Majority Leader Chuck Schumer (D-NY), wrote to President Biden and Education Secretary Miguel Cardona, urging them to extend the student loan pause.
“Tens of millions of federal student loan borrowers are scheduled to resume payments” in a matter of days, they wrote. “Despite repeated reports and surveys concerning whether borrowers will be able to pay, we understand the Administration is considering restarting student loan payments at the end of August. We write today to urge you to extend the pause on student loan payments, given the numerous economic issues facing borrowers across the nation, as well as administrative actions in process by the Department of Education.”
The impact on low-income borrowers and borrowers of color
Citing ongoing inflationary pressures, including high gas prices and rising household costs, the group argued turning student loan payments back on could devastate millions of borrowers, particularly low-income borrowers and borrowers of color.
“Low-income borrowers, Black and Brown borrowers, and women borrowers still face severe financial hardships as COVID-19 continues to infect individuals throughout the country and exacerbate existing inequities,” they wrote.
Incomplete student loan relief programs could be cause for extension of payment pause
The officials also noted that many Biden administration student loan relief programs and other changes have not yet been fully implemented or completed. This includes the Limited PSLF Waiver (which expired October 2022), the IDR Account Adjustment, and ongoing loan servicer transfers. The officials argued that restarting payments now “could contribute to unnecessary confusion for borrowers in the upcoming months.”
Notably, the officials did not call for a specific timeframe for a further extension. Recent reports suggest that Biden could extend the payment pause to the end of the year, or even well into 2023. A broad regulatory overhaul of key federal student loan programs, including student loan forgiveness and discharge programs, is not expected to be in full effect until July 2023.
Attorneys general urge Biden to extend Limited PSLF Waiver
Editor's note: While the PSLF waiver was not extended and expired October 2022, the IDR Adjustment offers many of the same benefits. The IDR Waiver, or IDR Adjustment, is a one-time account adjustment to give credit for qualifying payments to borrowers on income-driven repayment plans and under PSLF.
Also last week, a coalition of 20 state attorneys general wrote to President Biden, urging him to extend the Limited PSLF Waiver — a temporary expansion of the Public Service Loan Forgiveness program.
Under the waiver, the Education Department can retroactively count most past periods of repayment, as well as some (but not all) prior periods of deferment and forbearance, towards a borrower’s 120 payments required to qualify for Public Service Loan Forgiveness (provided the borrower was also working in qualifying employment).
But many borrowers must take action to qualify. Borrowers with FFEL loans, for instance, have to consolidate into the Direct consolidation loan program in order to benefit from the waiver. Since the initiative is set to end on October 31, 2022, and the consolidation process can take 30 to 60 days or more, August may be the last opportunity for some borrowers to take advantage of the opportunity.
The PSLF Waiver can alleviate financial strain for borrowers
The attorneys general argued that millions of borrowers may still not even be aware of the Limited PSLF Waiver, and it should be extended so that more people can apply.
“It is of the utmost importance that the PSLF Program function to alleviate the financial strain associated with student debt and support these critical sectors as our nation continues its recovery,” wrote the coalition. “We believe this can only be accomplished through extension… of the waiver.” The coalition urged Biden to extend the benefits of the waiver to at least July 2023, when updated PSLF regulations are expected to go into effect.
The coalition also argued that Biden should expand the waiver even further to count all forbearance periods towards PSLF, and to allow Parent PLUS borrowers to benefit, as well. The current waiver rules only count certain past forbearance periods, and they exclude altogether non-consolidated Parent PLUS loans from the benefits.
Advocates urge Biden to go big on student loan cancellation
While some advocates are pushing the Biden administration to extend or expand existing initiatives, others are calling on Biden to wipe out billions of dollars in federal student loan debt through broad-based student loan forgiveness.
Derrick Johnson, President of the NAACP, argued this week that any extension of the student loan pause “must be accompanied by meaningful cancellation” of student loan debt. “We urge you to cancel a minimum of $50,000, as Black borrowers — drowning in an average of $53,000 in student debt — have virtually no realistic way to pay it back in today’s unjust economy,” he tweeted on Tuesday.
Advocates for student loan borrowers have framed broad-based student loan cancellation as an issue of racial justice. Federal data released in 2017 showed that nearly half of Black student loan borrowers defaulted on at least one student loan within 12 years of enrollment, and many made little or no progress paying back their loans during that time.
According to the National Center for Education Statistics (NCES), nearly eight-in-ten Black students rely on federal student loans to pay for college, which is much higher than the national average for all students (six-in-ten).
How much cancellation is on the table?
Biden has previously expressed opposition to $50,000 or more in federal student loan cancellation and has more consistently supported a smaller figure of $10,000.
That smaller amount would eliminate the student debt for over 16 million borrowers, according to the Center for American Progress — a significant sum. But $40,000 or more in across-the-board student loan forgiveness would completely free 35 million Americans from student debt; this figure is equivalent to nearly 80% of borrowers.