Borrower advocate applauds extension of student loan payment pause

One borrower advocate is cheering President Joe Biden's extension of the student loan payment pause until the end of June next year while legal issues are resolved.

“We applaud the President for doing the right thing,” Natalia Abrams, president of the Student Debt Crisis Center (SDCC), said in a statement. “Too many borrowers, parents, and students have yet to recover from the financial harm caused by the pandemic and the possibility of a winter surge in COVID-19 cases is proof that this crisis is not over. Student debt cancellation is essential to helping borrowers recover from the pandemic, but it remains stuck in the courts.”

On Tuesday, the president announced the move, saying if the litigation has not been resolved by June 30, 2023, payments will begin 60 days after that. The forbearance pause was set to expire at the end of this year with repayments beginning in January.

“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong,” Miguel Cardona, U.S. Secretary of Education, said in a press release. “I want borrowers to know that the Biden-Harris Administration has their backs and we’re as committed as ever to fighting to deliver essential student debt relief to tens of millions of Americans. We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests.”

A group of seven multi-ethnic high school or university graduates wearing graduation gowns, holding diplomas. Throwing their caps in the air.
(Photo: Getty Creative) (kali9 via Getty Images)

Earlier this month, the Education Department stopped accepting applications for federal student loan forgiveness while it appeals a federal district court judge’s ruling in Texas that the program is a violation of legislative power.


That ruling followed several lawsuits that were filed after the forgiveness application was launched, but the Education Department ultimately prevailed in those instances.

Borrowers who tried to access the application on the website received a message that the site is not accepting applications at this time and to check back for updates. The government will hold applications of borrowers who already applied.

Secretary Cardona noted that over 26 million borrowers have applied and 16 million applications have been approved and sent to loan servicers to be discharged when allowed by the courts.

Until the court battle is resolved, borrowers should beware of scammers offering loan forgiveness or telling them to restart payments. The application for forgiveness is only available on the federal student aid (FSA) website and there is no cost or fee to apply.

With borrowers still struggling to recover from the pandemic and rising inflation, student advocates requested the Biden administration extend the forbearance pause.

“Restarting student loan payments is simply not affordable for millions of Americans,” Abrams said. “Federal student loan payments must not resume during this critical time – and the pause should continue until the President’s student debt cancellation plan is secured.”

White House Avoid Student Loan Scams
Credit: White House (White House)

Ronda is a personal finance senior reporter for Yahoo Money and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda

Read the latest personal finance trends and news from Yahoo Money.

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn