Social Security

Pressure is building on President Joe Biden to address the failures in the student loan system and cancel billions of dollars in debt before the pause on student loan payments expires at the end of September. Democrats and progressive organizations have warned that resuming student loan payments could blunt the economic recovery and are calling on Biden to provide ongoing relief to borrowers before federal student loan payments resume.

Advocates and members of Congress, including Democratic Senators Chuck Schumer and Elizabeth Warren, are urging the Biden administration to extend the payment pause, based on concerns that the student loan system isn’t ready logistically for payments to resume and that borrowers aren’t financially prepared — a recent survey of 23,000 borrowers by Student Debt Crisis, an advocacy group, found that nine in ten borrowers say they won’t be ready to restart payments on…

Tens of millions of borrowers have their federal student loan payments on pause right now, thanks to governmental efforts to keep them out of financial trouble during the pandemic. But as soon as Oct. 1, a switch will flip and most of those people will need to start the repayment process.

Led by the Student Borrower Protection Center, 128 organizations, including the American Civil Liberties Union (ACLU) and Service Employees International Union (SEIU), sent a letter to Biden on Thursday urging him to extend the payment pause until the administration has followed through on its promises to fix the student-loan system and cancel federal student debt.

On Thursday morning, more than 125 organizations also wrote to the president to extend the pause “until your administration has delivered on the promises you made to student loan borrowers to fix the broken student loan system and cancel federal student debt.”

Millions of student loan borrowers could be at risk of having their child tax credit seized by the government. A generous expanded child tax credit was part of President Biden’s American Rescue Plan, the Covid-19 relief package that Congress enacted in the spring.

The temporary pause on loan payments and accrual of interest, first instated at the beginning of the pandemic, provided a moment of much-needed relief. The moratorium was initially set to expire in March, but President Biden extended it to the end of September on one of his first days in office. Since then, there’s been silence. Without action, billions of dollars in monthly payments will come due in September.

Using publicly available data, SBPC showed that some colleges have been encouraging students to take out “shadow debt” — which it defines as the loans and credit outside the traditional private student loan market — that is marked by high interest rates and excessive fees, according to the report.