The Biden Administration’s Foolish Student Debt Repayment Moratorium Must End
WASHINGTON, D.C., February 8, 2022
President Biden’s extension of the student loan repayment pause is a cowardly act of political appeasement that is exacerbating our country’s debt crisis. It is time for President Biden to put the good of the country before special interests and resume student loan repayments.
Continuing this moratorium on student loan repayments is unfair to the millions of taxpayers who never went to college are shouldering the cost for this unwarranted and irresponsible policy. Another extension is an unwise, reckless policy that will harm borrowers and accelerate our nation’s path towards a fiscal catastrophe.
In Case You Missed It via Bloomberg Government, resuming student loan repayments shouldn’t be a question.
Stalled Student-Loan Payments, Like Life, Must Go On: Editorial
Since the early days of the pandemic, the U.S. government has allowed federal student-loan borrowers to suspend making payments and waived interest on their loans. Amid the current omicron wave, President Joe Biden has once again extended the pause — the fifth such delay in less than two years. He should make it the last.
Biden has continued to renew the policy, most recently in December. Borrowers will now be required to resume making payments this May — though progressives are pressuring the White House to extend the pause again or cancel student-loan debt altogether.
Biden should resist. Pausing student-loan payments made sense at the height of the pandemic, when much of the economy was shut down and the unemployment rate skyrocketed to 14.8%. There’s no justification for keeping the policy in place now. Roughly 85% of all outstanding student-loan debt is held by households headed by someone with a bachelor’s degree or higher. The joblessness rate among Americans with that level of education has fallen to near pre-pandemic levels. And while earnings for high-school-educated workers remain stagnant, median wages for recent college graduates have climbed to a 30-year high.
Like other forms of student-loan debt relief, the moratorium on repayment has disproportionately benefited high earners, while costing the government as much as $150 billion in lost revenue. Extending the pause again would compound these problems. It would incentivize current students to take out bigger loans, since under some repayment plans, the months covered by the moratorium still count toward eventual debt forgiveness. It might also worsen inflation, by subsidizing borrowers who would otherwise be paying down their loan balances.
The White House remains noncommittal about another pause, acknowledging only that it will have to make a decision before the May deadline. Rather than wait, Biden should rule out further extensions now. Doing so may disappoint advocates of debt cancellation, but it would promote fairness, cut the government’s losses and reduce uncertainty for borrowers themselves.
This system was dysfunctional long before the pandemic. Sensible reform can help alleviate the burden on the 43 million Americans with federal student-loan debt — but it’s time for the moratorium on repayment to end.
Read the full editorial here.