TUESDAY 4/5/2022 4:40 p.m.

WASHINGTON (AP) — The Biden administration plans to freeze federal student loan payments through Aug. 31, extending a moratorium that has allowed millions of Americans to postpone payments during the coronavirus pandemic, according to an administration official familiar with the White House’s decision-making.

Student loan payments were scheduled to resume May 1 after being halted since early in the pandemic. But following calls from Democrats in Congress, the White House plans to give borrowers additional time to prepare for payments.

The action applies to more than 43 million Americans who owe a combined $1.6 trillion in student debt held by the federal government, according to the latest data from the Education Department. That includes more than 7 million borrowers who have defaulted on student loans, meaning they are at least 270 days late on payments.

Borrowers will not be asked to make payments until after Aug. 31, and interest rates are expected to remain at 0% during that period.

The extension was first reported Tuesday by Bloomberg.

Democrats on education panels in the House and Senate recently urged President Joe Biden to extend the moratorium through the end of the year, citing continued economic upheaval.

Sen. Patty Murray said more time is needed to help Americans prepare for repayment and to rethink the government’s existing system for repaying student debt.

“It is ruining lives and holding people back,” she said in a statement last month. “Borrowers are struggling with rising costs, struggling to get their feet back under them after public health and economic crises, and struggling with a broken student loan system — and all this is felt especially hard by borrowers of color.”

Murray called on the Biden administration to lift all borrowers out of default to provide a “fresh start” following the pandemic.

The decision is being made amid rising concern that large numbers of Americans would quickly fall behind if payments restarted in May.

In March, the St. Louis Federal Reserve Bank warned that resuming loan payments could place a heavy burden on borrowers who faced financial hardship during the pandemic. It said the impact would be hardest on Black families, who are more likely to rely on student loans to pay for college.

“Serious delinquency rates for student debt could snap back from historic lows to their previous highs in which 10% or more of the debt was past due,” the bank said.

The Trump administration initially gave Americans the option to suspend loan payments in March 2020, and Congress made it automatic soon after. The pause was extended twice by the Trump administration and twice more under Biden.

It remains in question whether Biden will pursue widespread debt forgiveness to reduce the nation’s student debt. Some Democrats in Congress have pressed Biden to use executive action to cancel $50,000 for all student loan borrowers, saying it would jumpstart the economy and help Black Americans who on average face higher levels of student debt.

Last year, Biden asked the Education and Justice departments to review the legality of widespread debt cancellation, but no decision has been announced. Biden previously said he supports canceling up to $10,000, but he argued it should be done through congressional action.

Original Story: Biden administration expected to extend student loan pause this week

TUESDAY  4/5/2022 1:59 p.m.

(The Hill) – The Biden administration is expected to announce another extension to the student loan pause this week, multiple sources told The Hill.

The announcement could come as soon as Wednesday and would extend the moratorium on federal student loan payments and interest accrual past the current May 1 expiration date.  

President Biden is facing pressure by a growing number of Democrats to continue the freeze for several more months, with nearly 100 lawmakers across both chambers citing inflation as justification.

The measure was first put in place during the pandemic as a way to offer relief to those struggling. While it’s unclear when the new extension would end, Biden has faced calls to allow borrowers to pause payments until after the midterms. 

The president last extended the suspension in December. Loan payments were first put on hold in March 2020 under former President Trump and have since been extended five times.

The White House and Department of Education did not immediately respond to The Hill’s request for comment.

Whether Biden will act to forgive $10,000 in federal student loans per borrower is a looming question after he supported forgiving at least that much in the 2020 campaign. Progressives and activists pushed for more time to pay back debt publicly and privately this week and are seeking cancellation of an even larger sum.

Advocates and other Democrats, including Senate Majority Leader Charles Schumer (D-N.Y.), have pressed for $50,000 per person or to cancel debt entirely.

A year ago, Biden requested a memo from the Department of Education to determine his authority to forgive student debt through executive action. Since then, the administration has not publicly announced if the memo is complete.

White House press secretary Jen Psaki on Friday said a decision on the student loan pause needs to be made before May. She said the administration will “factor the impacts of economic data on ranges of groups of people, including students.”

Last month, White House chief of staff Ron Klain also signaled that the White House would extend the freeze. The Biden administration reportedly told companies in recent weeks to not send out notices about student loan payments resuming. 

Amie Parnes contributed to this report.