Deal Raises the Stakes for Millions with Student Debt as Supreme Court Prepares to Rule on Student Debt Relief Cases
May 28, 2023 | WASHINGTON, D.C. — This weekend, President Biden and Speaker McCarthy announced a deal to raise the federal government’s debt limit. This deal reportedly includes a bipartisan agreement to end the pause on federal student loan payments, interest charges, and debt collection that has been in effect for more than three years. According to public reports, it commits to a reckless and aggressive timeline to restart loan payments, irrespective of the outcome of a pair of cases before the U.S. Supreme Court that will determine whether President Biden’s August 2022 plan to cancel up to $20,000 in student loan debt can go into effect. The Administration has repeatedly argued that this cancellation of debt is critical to ensure that student loan borrowers are not economically harmed in the event the payment pause concludes.
Student Borrower Protection Center Executive Director Mike Pierce issued the following statement:
“With this announcement, Washington resumed its decades-long, bipartisan push to profit off the student debt crisis and squeeze money from student loan borrowers in order to pay the government’s bills. This is a betrayal and is awful on its own terms. It also creates a major political problem for President Biden, who has tarnished his sterling legacy as a champion for working people with student debt.
“As the Supreme Court considers the fate of the President’s plan to cancel student debt for tens of millions of people, what comes next will determine who occupies the White House in 2025. Regardless of the outcome at the high court, President Biden has to deliver for working people with student debt.”
Student Borrower Protection Center Deputy Executive Director and Managing Counsel Persis Yu issued the following statement:
“The student loan system was broken when President Trump paused student loan bills in the first days of the pandemic, and it remains broken today. Folding to pressure from House Republicans by throwing working people back into this broken system is cruel and reckless. Senior Biden Administration officials have said repeatedly, resuming loan payments without first cancelling student debt will result in a catastrophic wave of unnecessary borrower distress and default. The government should not be in the business of crushing millions of federal student loan borrowers. The Administration must be prepared to use all of its tools to protect federal student loan borrowers from financial ruin in the weeks ahead.”
Background
Student loan borrowers with a federally held loan have not been required to make a loan payment since March 2020, when President Trump signed the CARES Act, pausing student loan payments and suspending interest charges for tens of millions of borrowers. This critical lifeline was extended eight times via executive actions taken by President Trump in August and December 2020, and by President Biden in January, August, and December 2021, and April, August, and November 2022.
When Biden announced his intent to restart student loan payments after implementing broad debt relief, he explained that the Administration’s monumental debt relief plan was a necessary first step to protect borrowers and prevent disastrous loan defaults and other financial distress, particularly in light of the ongoing economic challenges facing our nation as a result of the pandemic.
In November 2022, a coalition of more than 220 organizations representing students, workers, and people of color called on President Biden to extend the pause on federal student loan payments until he kept his promise to cancel student debt, and utilize every legal authority available to enact that debt relief.
A copy of the November 2022 letter to President Biden can be found here: https://protectborrowers.org/wp-content/uploads/2022/11/2022.11.21-Payment-Pause-Extension-Letter.pdf
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About Student Borrower Protection Center
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.