Joe Biden

U.S. President Joe Biden speaks about student debt relief at Central New Mexico Community College Student Resource Center in Albuquerque, New Mexico, on November 3, 2022. (Photo: Saul Loeb/AFP via Getty Images)

225 Groups Urge Biden to Extend Student Loan Payment Pause During Court Fights

"We cannot allow these blatantly political lawsuits to throw millions of borrowers into financial catastrophe," argues a letter that also calls for ongoing legal action to ensure the relief plan can take effect.

A coalition of 225 organizations on Monday pressured the Biden administration to extend a pause on federal student loan repayments that is set to expire at the end of this year given GOP lawsuits targeting the plan to cancel up to $20,000 in debt per borrower.

"These borrowers deserve more than another broken promise."

Since President Joe Biden announced his long-anticipated debt cancellation plan in August, opponents have launched at least six lawsuits to block it--leading to two court decisions that are currently preventing the much-needed relief from reaching Americans.

The U.S. Department of Education (DOE) application website now explains: "Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders."

U.S. Solicitor General Elizabeth Prelogar on Friday appealed to the right-wing U.S. Supreme Court, noting that "the 8th Circuit's erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations."

The coalition's new letter issues a similar warning after thanking Biden "for taking historic action to tackle the student debt crisis in our country and promising life-changing relief to millions of federal student loan borrowers."

As the letter highlights:

In fewer than 45 days, as tens of millions of student loan borrowers remain closer than ever to historic debt relief, student loan payments are set to resume for the first time in nearly three years. This threatens to set borrowers back financially as our country grapples with the lasting effects of the Covid-19 pandemic, as our economy continues to experience the highest level of inflation in nearly four decades, and as government regulators sound alarms on rising levels of borrower distress. We, the undersigned 225 organizations, urge you to immediately extend the payment pause until your administration is able to fully implement debt relief for all eligible borrowers and to continue to use every legal authority at your disposal to make this relief real.

"It is important to remember that these borrowers have student debt because the cost of college, a critical pathway to the middle class, has spiraled out of control," notes the letter. "They also have this debt because past administrations routinely broke their promises to deliver affordable loan payments and debt relief. These borrowers deserve more than another broken promise."

"We cannot allow these blatantly political lawsuits to throw millions of borrowers into financial catastrophe," the letter argues. "Throwing millions of borrowers back into repayment as the state of debt relief remains uncertain is a recipe for disaster and will result in widespread confusion and set borrowers up for failure."

In a statement from the Student Borrower Protection Center, one of the groups behind the letter, potential debt relief recipients shared how Biden's plan would impact their lives.

"The current hold on President Biden's student loan cancellation leaves so many of us with uncertainty about if we will be able to keep our families afloat. I just learned that I have MS and am in the process of getting a divorce," said Erica in Maryland. "I am happy to be the first in my immediate family to graduate from university, but I'm living in poverty nonetheless. I'm unable to land a job and bills are piling up. Debt cancellation would be such a relief."

Ingrid in California said that "as a single mother and someone working in the nonprofit industry, I live paycheck to paycheck. I have no other debt except my student loans, and I have the intention to repay them, yet the incredible interest rates and requirements make repayment an endless and never-ending debt."

"It will be close to impossible for me to repay and still make ends meet," she stressed. "I will need another vehicle soon, and there will be no way for me to pay both student loans and a car payment. I have thought about returning to school, yet I do not want to incur additional debt. I am very worried about my child being able to seek higher education one day, given the current structure of student loans. Cancellation is the only way families like mine will see relief."

Fellow Californian Robin, who has over $90,000 in student debt, said that "I am drowning in financial insecurity due to the pandemic, inflation, and being a single parent. I am riddled with stress and anxiety. Being a paycheck away from extreme poverty at any moment, I worry every day about what straw will break my back."

"If payments unpause, I will certainly default on my loans," she continued. "I've already filed for bankruptcy once and still have all this debt that I couldn't possibly pay off in my lifetime. I don't know where to turn at this point and am so distressed. Borrowers like me are relying on President Biden to extend the pause and deliver on student debt cancellation."

The letter calling for an extension of the payment pause comes after the DOE this past weekend began sending out updates to the 26 million borrowers who sent in their loan forgiveness applications before the administration stopped accepting them earlier this month.

Education Secretary Miguel Cardona confirmed the emails in a pair of tweets:

"We reviewed your application and determined that you are eligible for loan relief under the plan," the email states, according toAxios. "We have sent this approval on to your loan servicer. You do not need to take any further action."

"Unfortunately, a number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present," the email adds. "We believe strongly that the lawsuits are meritless, and the Department of Justice has appealed on our behalf."

The email further pledges that "your application is complete and approved, and we will discharge your approved debt if and when we prevail in court."

Meanwhile, Bloomberg reported Friday that experts say "Biden has little choice other than to extend the almost three-year freeze on U.S. student loan payments, as his attempt to forgive some of the debts gets mired in legal challenges."

"There is not a chance this will happen before the end of the year because of the outstanding lawsuits. There is not time to legislate the issue in court," said Mary Jo Terry, managing partner at the private student loan company Yrefy. "Servicers have to notify borrowers within a certain timeframe if repayment is starting."

Although a White House spokesperson declined to comment, unnamed sources familiar with the matter toldThe Washington Post earlier last week that senior Biden aides have been discussing the possibility of a temporary extension.

"As the legal vulnerability has become clearer and clearer, the White House has been making increasingly firm plans to extend the loan repayment pause," one source said. "The extension we're likely to see is meant to make sure borrowers don't have the rug pulled out from under them, rather than an indefinite replacement for loan forgiveness."

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