Coalition Urges Biden Administration to Lift Pause on Student Loan Payments

President Joe Biden speaks in Washington, on March 8, 2022. Win McNamee/Getty Images

A coalition of groups on March 8 urged President Joe Biden’s administration to end the pause on student loan payments, arguing the policy is costing taxpayers billions of dollars each month.

“The moratorium is fundamentally unfair and is a special favor for affluent elites at the expense of low- and middle-income Americans,” the Americans for Tax Reform, FreedomWorks, and other groups wrote to Education Secretary Miguel Cardona.

Former President Donald Trump’s administration imposed the student loan payment pause in March 2020, representing it at the time as lasting for 60 days.

But it has been in place ever since, extended both by Trump administration officials and, later, officials in Biden’s administration.

White House press secretary Jen Psaki told reporters in December 2021 that the policy would be allowed to expire on Feb. 1, 2022. That promise was later reversed, and the pause was extended through May 1.

“This additional extension of the repayment pause will provide critical relief to borrowers who continue to face financial hardships as a result of the pandemic, and will allow our administration to assess the impacts of Omicron on student borrowers,” Cardona said at the time.

Even though the economy has recovered strongly and unemployment is low, “we know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” Biden said.

In the new letter, the groups assert the policy is contributing to surging inflation, costing taxpayers some $5 billion each month it remains in place.

They say the pause “is unfair to blue-collared Americans who did not rack up tens of thousands of dollars of debt and those who proactively paid off their debt,” pointing to a Committee for a Responsible Federal Budget analysis that found about three-fourths of repayment dollars come from the top 40 percent of income earners.

The committee said the effects of the pause “are likely even more skewed” because graduate student loans typically have higher interest rates.

“This policy is one example of many handouts, subsidies, and payment pauses through which the federal government floods the economy with so much money that demand is growing too fast for production to keep up,” the letter to Cardona says.

Grover Norquist, president of Americans for Tax Reform, Adam Brandon, president of FreedomWorks, and Garrett Bess, vice president of Heritage Action for America, were among the signatories.

The Department of Education did not immediately provide a response while the White House did not return a request for comment.

White House chief of staff Ronald Klain said in a March 4 interview that the administration may extend the pause yet again before it expires.

“The president is going to look at what we should do on student debt before the pause expires, or he’ll extend the pause,” Klain stated, adding that the White House will reach a decision on whether to use executive action on the act “before payments resume.”

“Joe Biden right now is the only president in history where no one’s paid on their student loans for the entirety of his presidency,” Klain added.

Tammy Hung contributed to this report.