The real reason behind Biden’s latest pause on student loan payments

On Tuesday, the Biden administration announced that it will once again extend its pause on federal student loan payments. According to Department of Education, the pause, which was set to expire in December, could now be pushed back as far as the end of August 2023.

The Biden administration claims the move is a direct response to a recent decision by a federal appeals court to impose an injunction on the president’s debt cancellation plan. In August, the White House announced a plan offering “$20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients.”

Earlier in November, the U.S. Court of Appeals for the 8th Circuit stopped Biden’s loan cancellation program, triggering an emergency appeal to the Supreme Court by the White House.

Now, the Biden administration says it won’t require federal loan payments until 60 days after the loan cancellation program’s legality is settled by courts. If the matter isn’t resolved by June 30, 2023, Biden says payments will start 60 days later.

Miguel Cardona, the secretary of the Department of Education, claimed in a statement Tuesday that the reason for the newest pause is that “it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests.”

While I have no doubt that the White House thinks its move to cancel hundreds of billions of dollars in debt with the stroke of the president’s pen is the right decision, the truth is, fairness has nothing to do with Biden’s latest choice to continue the freeze on student loan payments. There are several reasons why we know this is the case.

First, if the payment pause really were about concerns over the unfairness of asking borrowers to pay back their own debt after promising to cancel up to $20,000, why not freeze payments only for those with less than $20,000 in federal loan debt? A borrower with $100,000 in debt will have roughly the same monthly payment whether he or she receives $10,000 to $20,000 in forgiveness or not, so pausing payments for those borrowers makes little sense.

Second, the fairness argument instantly falls flat on its face because the very nature of student loan cancellation is that someone – namely other taxpayers – are required to cover the cost of debt for a student they have no connection to. In many cases, these taxpayers paid for their own college education. If there is anything unfair about this situation, it’s that debt cancellation would be offered at all.

Third, the Department of Education (DOE) has extended the payment pause eight times, and in every instance, it offered a new excuse for why Americans shouldn’t be required to start making payments again — including surging COVID-19 cases, inflation and now legal decisions about policies not directly related to the payment pause. It seems there is always an excuse for another round of payment freezes.

So, if the White House isn’t telling the truth about its justification for pausing payments, what are the real reasons? I have two theories, both of which make a lot more sense than the one offered by the Department of Education.

One likely motivation behind the move is that Biden doesn’t want to take the political blame that comes with restarting student loan payments. Federal student loan payments have become something of a political game of musical chairs. No one wants to be left standing when the music stops — or, in this case, when payments restart.

The Trump administration and Democrat-led Congress paused student loan payments for the first time in 2020, at the height of the COVID-19 pandemic. It has been nearly three years since borrowers have been required to make payments on their federal student loans. Forcing tens of millions of borrowers to pay a bill they haven’t seen in years is a political loser. It makes much more sense for Biden to continue “pausing” debt payments until he’s no longer living at 1600 Pennsylvania Avenue. Then, it will be some other president’s problem.

A second reason Biden likely wants to continue the pause is that it greatly benefits employees at government agencies, including many teachers, as well as workers at many nonprofits. Of course, both groups are part of Biden’s political base.

Under the Public Service Loan Forgiveness program, anyone who makes ten years’ worth of monthly student loan payments — 120 in total — while working for a government or nonprofit organization receives total debt forgiveness, no matter how much they owe.

Although it defies all logic, the Biden administration is continuing to count non-payments under the pause toward the total number of payments required to qualify for Public Service Loan Forgiveness. That means that since the pause began in 2020, government and nonprofit workers have managed to shed nearly three years’ worth of payments from their 120-payment requirement, all without being required to make a single payment.

The longer the student loan freeze continues, the more government and nonprofit workers will qualify for total loan forgiveness. At the very least, millions will move much closer to attaining student debt cancellation. It’s one of the biggest welfare programs in America today, it mostly benefits well-paid college graduates and most people have no idea it’s going on.

The White House claims it cares about fairness. But if it really wanted to promote true equality and fix America’s costly higher-education system, it wouldn’t support student debt forgiveness programs at all. Instead, it would focus on pursuing policies that would lower the cost of attending college and incentivize educational alternatives, such as skilled-labor training programs.

Of course, that’s not likely to happen. It’s much easier to provide young people with bailouts they didn’t earn, continue to run up the national debt, add to the country’s growing inflation crisis and keep the cash rolling into leftwing colleges nationwide.

Justin Haskins (Jhaskins@heartland.org) is the director of the Socialism Research Center at The Heartland Institute and a New York Times bestselling author.