A group of Democratic lawmakers have urged President Joe Biden to extend the federal student loan payment pause before its expiration on Aug. 31st.
Sens. Bob Menendez, D-N.J., Cory Booker, D-N.J., Elizabeth Warren, D-Mass., and Chuck Schumer, D-N.Y., and Reps. Lauren Underwood, D-Ill., Tony Cárdenas, D-Calif., and Ayanna Pressley, D-Mass., said they, with 100 other lawmakers, sent a letter to the Biden administration and the Education Department last week advocating for another extension, according to a press release.
"For over two years, the department has provided critical flexibility to millions of federal student loan borrowers by pausing payments, as many have struggled during the COVID-19 pandemic," the lawmakers wrote in the letter. "This much-needed pause has helped many borrowers to keep a roof over their heads, secure childcare, and purchase food, health care, and medicine during the course of a pandemic responsible for the deaths of more than 1 million people in the U.S.
"For the first time, many borrowers have had the opportunity to pay down debt, open a savings account, purchase a home, and save for retirement – none of which would have been possible without the payment pause," they continued.
Federal student loans are currently in COVID-related forbearance and payments have been paused until Aug. 31st. During this time, borrowers are not required to make payments on their loans and interest rates have been set to 0%. The Department of Education has also stopped collections on defaulted loans during this time.
If you have private student loans that do not qualify for the payment pause, you can still try to reduce your monthly payments by refinancing. Visit Credible to find your personalized interest rate without affecting your credit score.
Lawmakers say resuming payments would create financial hardships
In the letter, the lawmakers said that if Biden does not extend the pause and borrowers had to resume their monthly student loan payments, it would force them to choose between paying those loans or other bills such as their rent or mortgage, food, childcare or healthcare.
This comes as inflation hit yet another new 40-year high in June. The Consumer Price Index (CPI) increased by 9.1% annually, hitting its highest point since November 1981, according to the Bureau of Labor Statistics (BLS).
"Despite significant decreases over the last month, gas prices are still high, and many borrowers still have to pay exorbitant amounts each week in order to commute to their jobs," the lawmakers said. "Food prices remain high, as suppliers contend with ongoing supply chain issues and the war in Ukraine. We still have a significant childcare crisis throughout the country, which has caused already-high costs to spike to 40% of their pre-pandemic levels.
"Low-income borrowers, Black and Brown borrowers, and women borrowers still face severe financial hardships as COVID-19 continues to infect individuals throughout the country and exacerbate existing inequities," they continued.
If you are struggling with rising costs, refinancing your private student loans could help you lower your monthly payments. Visit Credible to compare multiple student loan lenders at once and choose the one with the best interest rate for you.
Biden considers payment pause extension, canceling student debt
While speaking to reporters at Air Force One last month, Biden confirmed that he will make a decision on student debt by the end of August. However, it was not clear which decision the president was referring to. Prior comments from the White House and the Department of Education have opened the possibility for widespread student debt forgiveness and/or an extension of the current student loan payment pause.
Biden has previously said that he's considering canceling some student debt but has not yet given an official decision on when, or how much. He did, however, say that he will not cancel the $50,000 in student loan debt that some Democrats have called for.
"I am considering dealing with some debt reduction," Biden told reporters at the White House in May. "I am not considering a $50,000 debt reduction. I am in the process of taking a hard look at whether or not there will be additional debt forgiveness and I will have an answer on that in the next couple of weeks."
If you have private student loans, you won't benefit from another payment pause extension or from student loan forgiveness. However, you can reduce your monthly payments by refinancing to lower your interest rate. To see if this is the right option for you, contact Credible to speak to a student loan expert and get all of your questions answered.
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