Biden's Education Department may be signaling yet another student-loan payment pause extension
- The Education Dept. told student-loan companies to halt outreach on payment resumption, WSJ first reported.
- The department took the same action before the previous payment pause extension.
Student-loan payments are set to resume in just over a month, but President Joe Biden's Education Department is telling loan servicers to stop communicating that with borrowers.
The Wall Street Journal first reported on Monday that the department has instructed the companies that manage federal student loans to halt sending billing statements to borrowers ahead of when payments are currently set to resume, after August 31.
Scott Buchanan, the executive director of the Student Loan Servicing Alliance — a trade group that represents all federal loan servicers — told the Journal that "we're almost 30 days away from the planned resumption and the department has been telling servicers to hold off on resumption communications for the last few months."
"Maybe the department expects that the White House will yet again kick the can down the road," Buchanan said. He also noted to NBC News that if there still isn't any guidance from the department by August, it would create an "untenable position" for servicers and borrowers due to lack of time for planning.
The Student Loan Servicing Alliance did not immediately respond to Insider's request for comment.
While the department and White House have not yet commented on another extension, it's possible it could be on the horizon. In March, when payments were scheduled to resume on May 1, the department instructed servicers to halt outreach on the payment resumption, and the pause ended up getting extended one month later.
Leading up to this point, though, the department has maintained that borrowers should still plan to resume payments in September. Biden is also in the process of making a decision on broad student-loan forgiveness, with reports suggesting it'll likely be $10,000 in relief for borrowers making under $150,000 a year.
With that relief looming, some advocates and Democratic lawmakers have been pushing for a payment pause extension to ensure any forgiveness is fully implemented before borrowers are hit with another monthly bill. 180 organizations recently wrote to Biden urging him to "enact robust student debt cancellation that is not means tested and does not require an opt-in for participation and to fully implement this policy before any student-loan bill comes due."
As Insider previously reported, if Biden does choose to subject student-loan relief to income thresholds, it will be a significant administrative burden to implement. It's unlikely relief would be automatic given borrowers would have to verify their income in some way. Democratic lawmakers have urged the president against an income cap, as well, to ensure relief is as broad as it can be.
If the pause does get extended again, though, Republican lawmakers are unlikely to be pleased. Many of them have criticized the prior extensions of the pause has unnecessary and costing taxpayers, with some going so far as to introduce legislation blocking Biden from extending the pause and canceling student debt broadly.
Regardless of what Biden decides, August is less than a week away and while Education Secretary Miguel Cardona promised borrowers "ample notice" on any relief, plans remain up in the air.
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