Government Extends Pause on Student Loan Payments Until Legal Challenges are Resolved

The Biden Administration yesterday announced it was extending the moratorium on student loan payments until 60 days after litigation surrounding the plan to forgive up to $20,000 in unpaid student loans is resolved. If the litigation has not been resolved by June 30 of next year, payments will resume 60 days after that, the government announced.

The moratorium was set to expire on December 31. Student loan payments have been paused since March 2020 when the COVID-19 pandemic struck the United States.

In August, the government announced a plan to forgive $10,000 in unpaid student loans — $20,000 if Pell grants are involved — for anyone making less than $125,000 annually. The plan was expected to wipe out at least some, if not all, of the unpaid student loans for about 40 million individuals. More than 26 million people filed applications for relief, but a number of lawsuits were filed seeking to block the plan from going into effect. A District Court judge and the Court of Appeals for the Eighth Circuit ruled the government did not have the authority to launch such a plan without Congressional approval. The government has filed a petition with the Supreme Court for it to hear arguments in the case and issue a ruling once and for all. About 16 million individuals have already had their applications for cancellation approved by the government, but that can’t be finalized until the legal challenges are resolved.

This marks the eighth time that the government has extended the moratorium on student loan payments in the past 30 months.

Critics of the debt cancellation plan say it neither addresses the root-cause of the problem — the skyrocketing costs of attending university in the United States — nor is it fair to those who have paid their loans or never went to college in the first place.

“I am completely confident my plan is legal,” President Biden said yesterday in a video posted to Twitter. “It isn’t fair to ask tens of millions of borrowers who are eligible for relief to resume their student debt payments while the courts consider the lawsuit.”

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