Democrats Push Biden to do More on Student Debt Relief as the Return of Payments Nears

WASHINGTON (TND) — Democratic lawmakers are pressuring the Biden administration to help student borrowers as payments are set to restart in October after three years of a pause comes to an end after the president’s debt cancellation plan was tossed by the Supreme Court.

In a letter signed by dozens of Democrats in Congress, including Senate Majority Leader Chuck Schumer, they pushed Biden to do more to protect borrowers who may not be able to afford to resume payments.

The forbearance period will come to an end once the calendar turns to September and payments will become due in October for many borrowers. Democrats and debt cancellation advocates have been warning about thousands of borrowers being unprepared or unable to afford payments restarting amid inflation and the end of more generous benefits like the child tax credit.

The letter was sent near the anniversary of the White House’s announcement that it would try to cancel at least $10,000 in federally held student loan debt through executive action. That plan was struck down by the Supreme Court in June in a 6-3 decision.

Student Debt Relief Letter to Biden by Austin Denean on Scribd

“Although the Supreme Court has chosen to stand in the way of your initial student debt relief plan, we recognize that as President of the United States, you have additional tools to provide relief,” the Democrats write. “Working and middle class families need this relief to come as soon as possible. We urge you to continually find ways to use your authority to bring down student debt, address the rising cost of college, and make postsecondary education affordable for all students who choose that path.”

Since his original plan was struck down, Biden and the Department of Education have worked to find a new path to widespread cancellation. That plan, with many details still up in the air, will take longer to implement and is likely to face the same barrage of legal challenges that his other plan faced.

The Biden administration has also taken multiple steps to overhaul the student debt repayment system, enacted relief to borrowers who were defrauded or misled by their schools, and simplified the income-driven repayment plans, which included a new plan that financial experts said has some of the most generous terms ever offered for borrowers.

Biden is unable to extend the payment pause that had been in effect since the coronavirus pandemic swept through the country in 2020 due to a provision in the bill to raise the debt ceiling, which means borrowers will soon have to make payments on their debt for the first time in years.

Applications are also open for the new income-driven repayment plan, which will decrease payments for millions and lower them to $0 for some borrowers while preventing interest from snowballing if their monthly payment does not cover the amount owed.

To help borrowers who may not be able to afford a payment ease back into it, Biden said his administration will offer a 12-month “on-ramp,” where missed payments will not be reported to credit bureaus.

Democrats in Congress want to see the administration do more to avoid a rush of delinquencies.

“While we understand your administration’s efforts in providing a 12-month ‘on-ramp’ starting on October 1, 2023 to protect borrowers during the transition to repayment, we remain gravely concerned about the Department of Education’s projections that without additional relief, student debt delinquencies and defaults will spike once repayment resumes,” the letter says.

They also pushed for the backup plan for widespread relief, which is under a rulemaking process by the Department of Education, to go into effect before the year-long window comes to a close.

It’s unclear exactly what the timeline will be for the “negotiated rulemaking” process to play out and how quickly it will be frozen or rejected by the courts in lawsuits that are guaranteed to come. The administration has said they believe the rulemaking process will prove to be legally sound, but it also remains unclear who will be eligible, how much relief will be offered and if they are right about its legal fortunes.

Biden has been under pressure to use executive authority to act on student debt since taking office, an issue that he has previously been skeptical of prior to taking office. With the 2024 election growing closer, his campaign has been looking for ways to shore up support among the party’s progressive base and with young voters, who are much more likely to support debt relief and prioritize it at the voting booth.