On Thursday (02/04/2021), President Barack Obama signed an executive order to extend the pause on federal student loan payments through Sept. 30, his first action to address student debt.
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President Biden on Thursday (02/04/2021) signed an executive order to extend the pause on federal student loan payments through Sept. 30, his first action to address student debt.
The executive order is for federal student loans, and it will extend the pause on federal student loan payments through Sept. 30.
The president’s action follows months of criticism from borrower advocates who have been urging him to use his authority as president to stop debt collectors from suing millions of Americans over unpaid debts they were promised would be “forgiven” if they remained current with their monthly payments in a special program created by Congress after 9/11.
The decision also comes as Biden continues a nationwide tour designed to build support for his proposed economic recovery plan, which he hopes will help him gain momentum in early primary states before declaring his candidacy later this month.
The order will also keep interest from accruing, a freeze that was set to expire on March 31.
In addition, interest will not accrue on federal loans until after the freeze ends.
“The government’s commitment to extending these protections reflects a shared desire to help more students pursue their dreams,” said U.S. Secretary of Education Betsy DeVos in a press statement announcing the decision. “I am grateful for all of our partners who came together to make this happen.”
Although private student loans are not included in the order, they may be affected by its terms if borrowers have outstanding debt at schools that hold federal funding and choose not to go into forbearance while they wait out the halt on interest accrual on new loans offered by their lenders.
The action had been expected and builds on a deferment measure first implemented under former President Donald Trump’s administration due to the coronavirus pandemic. The latest announcement extends that relief until December 31, 2021.
The move will allow students who were enrolled in an educational institution at the time of their state or territorial declaration of emergency to apply for relief from their federal student loan debt. Students may also be eligible if they were unable to continue their studies because of the virus.
Congress has signaled it wants to cancel up to $50,000 in federal student debt per borrower but lawmakers have not determined how they would pay for it.
In the meantime, Congress has signaled that it wants to cancel up to $50,000 in federal student debt per borrower but lawmakers have not determined how they would pay for it.
- Some Democrats are calling for a tax on wealthy households or a financial transactions tax. Both would likely face opposition from Republicans and some centrist Democrats who believe such proposals could hurt the economy and drive away capital markets investors.
- Other options include eliminating subsidies for oil companies, raising taxes on large inheritances or increasing excise taxes on big banks and investment firms. These ideas also face opposition from Republicans who oppose new taxes or higher rates.
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We’re glad to see momentum on this issue and hope that lawmakers will take up this legislation soon so that more students can benefit from the pause on federal student loan payments.
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