Biden faces rising pressure on student loans with deadline looming

President Biden is in a difficult position on student loans ahead of the midterms, as pressure builds from borrowers and Democrats for widespread cancellation.

Adding to the pressure is a key deadline: On May 1, millions of borrowers will have to pay unless a freeze on federal student loan payments put in place during the pandemic is extended.

Biden has been called on to extend the freeze until the next year — beyond the midterms.

But advocates for forgiveness, along with key Democrats, want more than another freeze.

“We’ve been saying for years now that we need to keep payments on pause until we cancel student debt,” said Natalia Abrams, president and founder of the Student Debt Crisis Center (SDCC).

Biden last extended the suspension in December. Loan payments were first paused in March 2020 under former President Trump, and have since been extended five times.

A growing number of Democrats are calling for a new extension, ramping up pressure on the White House.

“I’m hopeful that the president is going to take action,” Sen. Cory Booker (D-N.J.) told The Hill this week. “It is something that is extraordinarily popular, not just with people with student loans, but families of people going to college.”

White House press secretary Jen Psaki on Friday said a decision needs to be made before May. She said the administration will “factor the impacts of economic data on ranges of groups of people, including students.”

In 2020, Biden was one of a number of Democratic presidential candidates who called for widespread cancellation of federal student loans.

The number of student borrowers has risen sharply over the past two decades. According to the Peter G. Peterson Foundation, federal student debt has grown seven times over, from $187 billion to $1.4 trillion, between 1995 and 2017.

The Federal Reserve estimated last year that roughly $1.7 trillion in student loan debt had been racked up by borrowers nationwide.

Biden in the campaign supported forgiving at least $10,000 in federal student loans per person. Others, including Senate Majority Leader Charles Schumer (D-N.Y.), have pressed for $50,000 per borrower or to cancel debt entirely.

Democrats are warning that inaction could cost them in November, when the party will try to hold on to House and Senate majorities.

Rep. Ilhan Omar (D-Minn.), who has called on Biden to wipe out “all student debt” in the past, said this week she thinks “inaction is going to be really dangerous for us in the midterms.”

“Enthusiasm is really low,” Omar said of Democratic voters. She added that “it’s important to listen to the people who have sent us to represent them and then us, and I know that student debt cancellation is a priority.”

Senate Health, Education, Labor, and Pensions Committee Chairwoman Patty Murray (D-Wash.) last month called for extending the freeze until 2023. Since then, nearly 100 Democrats across both chambers have also pushed for the extension, citing inflation loan-holders are facing.

“We’re definitely hearing from borrowers who will be changing their voting preferences and maybe not even voting because of the failure to see student loan cancellation passed,” said Cody Hounanian, SDCC’s executive director.

Leaders of the House Progressive Caucus raised the issue with Biden in a sit-down on Wednesday. Rep. Mark Pocan (D-Wis.), who attending the meeting, said members discussed potential next steps, including “possible cancellation, possible extension of some of the programs that we’re already doing and repayments.”

“The president’s very cognizant that this is important to a lot of people who are just trying to get by and the good news is we had a really great conversation on that and a whole lot of other, I think, essential pocketbook issues,” he said.

Biden in April requested a memo from the Department of Education to determine his authority to cancel student debt through executive action. Since then, the administration has not publicly announced if the memo is complete. 

The White House, when asked for comment, pointed to the “breathing room” the pause has given to borrowers. It also noted that no one has paid any federal student loans since Biden took office.

“The Education Department will continue working to ensure a smooth transition to repayment in May. The president supports Congress providing $10,000 in debt relief. And he continues to look into what debt relief actions can be taken administratively,” a White House official said.

A spokesperson for the Department of Education told The Hill that alleviating the burden of student debt is a critical priority. The administration is “committed to providing needed relief and meeting our ultimate goal of permanently making college more affordable,” the spokesperson added.

The department said it will keep communicating with servicers and borrowers about repayment updates.

The Biden administration reportedly told companies in recent weeks to not send out notices about student loan payments resuming.

​​Council of Economic Advisers Member Jared Bernstein acknowledged that student loan borrowers “face real challenges making debt payments,” when asked during the White House press briefing on Friday if borrowers are prepared to resume payments.

Bernstein also noted that White House chief of staff Ron Klain has previously “leaned into that” question. Klain signaled in early March that the White House would extend the freeze on student loan payments.

But advocates contend more action is needed.

“If Biden restarts payments on May Day we know that nearly 8 million people will be pushed into default,” said Thomas Gokey, organizer with the Debt Collective. 

“We don’t need to pause this crisis, we need to end it. Biden can cancel all federal student loans with a signature,” he added.