About 26 million Americans have applied for student loan forgiveness since August, and the US Department of Education has already approved requests from 16 million. The government stopped taking new applications November 11, after the Texas judge blocked Biden’s order.
The Biden administration on Tuesday announced that it will extend the payment pause on federal student loans until after June or when it’s able to move forward with its debt forgiveness plan. “It isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuit,” Biden said in a video posted on Twitter.
Federal student loan bills had been scheduled to resume in January.
The administration’s move comes in response to a federal appeals court ruling last week that imposed a nationwide injunction on the debt relief plan.
The pause will be extended until 60 days after the Biden administration is allowed to implement its student loan forgiveness plan and litigation is resolved, according to a press release by the U.S. Department of Education. If it can’t proceed with its policy and the legal challenges are still unfolding by June 30, 2023, student loan payments will restart 60 days after that.
The programme forgives $10,000 of debt held by the federal government for individuals who make less than $125,000, couples who make less than $250,000 and $20,000 of debt held by Pell Grant holders, who are mostly lower-income borrowers.
“We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests,” Education Secretary Miguel Cardona said in a statement.
US borrowers hold about $1.77 trillion in student debt, according to the latest Federal Reserve figures. The vast majority of that is held by the federal government. Biden’s student loan forgiveness plan could add $300 billion to $600 billion to the federal debt, economists estimate.
The cost of higher education has skyrocketed in the United States in the past three decades, doubling at private four-year colleges and universities and rising even more than that at public four-year schools, according to research from the nonprofit College Board. The outstanding balance of student loans nearly quadrupled from 2006 to 2019.
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