Secretary of the U.S. Department of Education Betsy DeVos announced on Friday an extension of the moratorium on student loan payments under the CARES ACT. Meanwhile, some Democrats have urged President-elect Joe Biden to completely eliminate student debt.
Whereas the economic relief measures granted to the Americans as part of the Coronavirus stimulus package are due to expire at the end of December, the extension of DeVos’ cease-and-desist order is not expected to end before the end of January 2021. According to the provision, borrowers are not expected to make their monthly loan payments. Interest on student loans is not accrued.
” The Coronavirus pandemic has created challenges for many students and borrowers, and this temporary suspension of payments will help those who are affected,” DeVos said in a statement Friday. “The additional time will also allow Congress to do its work and determine what measures it deems necessary and appropriate. Congress, not the executive branch, is responsible for student loan policy”.
In June 2020, Americans who borrowed money to finance their education owed $1.67 trillion in federal and private loans, according to the Federal Reserve.
It is expected that Biden will take office before the DeVos extension expires. Part of Biden’s published platform for secondary education includes the Public Service Loan Forgiveness Program, which would provide $10,000 in debt relief to college students in exchange for the provision of public or national services.
President Donald Trump has spoken out against loan forgiveness programs. In the U.S. 2020 budget, Trump proposed to abolish an existing public service loan waiver program. In its place, reforms were proposed for student loans that would limit monthly repayments to 12.5 percent of the borrower’s disposable income.
Students’ borrowers of student loans would be waived the balance after a period of 15 years. Borrowers who had attended graduate school would have the balance waived after 30 years of monthly payments. Trump’s student loan reform was not adopted.
Some progressive Democrats have encouraged Biden to go further and cancel a larger amount of student debt. In an article on Blavity published on Friday, Massachusetts Senator Elizabeth Warren and Senate majority leader Chuck Schumer called on the new Biden administration to cut up to $50,000 in student debt.
“A broad cancellation of the student debt would give tens of millions of Americans $200 to $300 more to spend and save each month,” wrote Warren and Schumer. “Debt relief also means that they don’t have to worry about a time bomb exploding for student debt when the suspension of payments ends. With more money in their pockets and a lower debt burden, they can consider larger purchases such as cars and houses and, for some, start their own businesses.
“This is good for the borrower and good for our economy,” Schumer and Warren added.
Biden has not yet publicly announced whether he will follow Warren and Schumer’s proposals or stick with his original plan. Washington Newsday turned to the Biden transition team for comment.