What Biden’s Latest Covid Move Means For Student Loan Programs, Including Loan Forgiveness

President Biden announced that the national emergency related to the Covid-19 pandemic will end on May 11, over three years after it first began. The official end of the pandemic emergency will impact a wide array of policies — including, potentially, student loan programs.

Several student loan debt relief programs, including the ongoing student loan payment pause and Biden’s one-time student loan forgiveness program, have been directly linked to the ongoing national emergency. Here’s what the change may mean for student loan borrowers.

Student Loan Payment Pause Extension

In response to the economic upheaval caused by the pandemic in March 2020, President Trump used emergency executive authority to pause all payments, freeze interest, and suspend collections for government-held federal student loans. Congress subsequently codified the debt relief through passage of the CARES Act, which provided for six months of paused payments, interest, and collections. As the pandemic and economic fallout wore on, President Trump, and then President Biden, issued multiple short-term extensions of the relief.

Biden’s most recent extension of the student loan pause, issued last November, will continue until June 30, 2023, or when the Supreme Court rules on the President’s one-time student loan cancellation program (whichever occurs first).

Both the Trump and Biden administrations relied on the HEROES Act of 2003 to justify the student loan pause extensions and associated benefits. This statute allows the Education Department to temporarily modify federal student loan programs in response to national emergencies, such as a pandemic.

While the Biden administration has decided to end the Covid emergency this coming May, as reported by Politico, officials have confirmed that this won’t impact the current extension of the student loan pause, which could continue to the end of June. In other words, the pause won’t be cut short early as a result of the official end of the emergency.

However, without the national emergency, it may be more difficult for the Biden administration to justify any further extensions of the payment pause beyond June. Officials could try to argue that the economic fallout from the pandemic continues, necessitating another extension even though the emergency itself has officially ended. The Education Department may also find another statutory justification for extending the relief. But the end of the national emergency will undoubtedly provide critics of the administration, and newly-empowered Republicans in the House of Representatives, with fodder for opposition and a potential basis for legal challenges.

Biden’s One-Time Student Loan Forgiveness Plan

Last fall, Biden announced a sweeping and unprecedented one-time student loan debt cancellation plan would provide up to $20,000 in student loan forgiveness for millions of borrowers with government-held federal loans. Over 26 million borrowers submitted applications for debt relief after the application became available, and over 16 million borrowers were approved across all 50 states.

However, multiple legal challenges ended with two federal courts blocking relief under the initiative. The legal dispute is now going before the Supreme Court, with oral arguments scheduled for late February and a decision expected by June.

Similarly to the student loan pause, the Biden administration has relied on the HEROES Act of 2003 and the national pandemic emergency to justify the program. The administration has argued that the economic fallout from the pandemic requires sweeping action to make borrowers whole and prevent anticipated mass student loan defaults.

The Biden administation will likely argue that the end of the pandemic emergency does not undercut its justification for providing broad student loan forgiveness. In a legal brief filed with the Supreme Court earlier this month, Justice Department attorneys argued that, “Several provisions of the HEROES Act underscore Congress’s intent to authorize the Secretary to respond quickly and fully to national emergencies,” and that the statute allows the Education Department to “provide targeted student-loan debt relief to borrowers affected by national emergencies.”

If the Supreme Court winds up striking down the program, the Biden administration will need to give up on the initiative, or reissue the program under an alternative legal authority, as some borrower advocates have suggested, that is not directly related to the Covid-19 emergency. However, administration officials have maintained that there is currently no backup plan currently under consideration.

Further Student Loan Forgiveness Reading

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Lawsuit Challenging Biden’s Student Loan Forgiveness Plan Gets Dismissed, But Legal Battle Continues

Student Loan Forgiveness: These Deferment And Forbearance Periods May Count

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