The Biden administration is ready to restart repayment of federal Student loan debt once the coronavirus pandemic emergency is over.
During a Senate Appropriations Committee hearing, Secretary of Education Miguel Cardona declined to publicly disclose the specific details of the support that borrowers would receive during the transition.
Legal Challenges to Student Loan Forgiveness Program
This inquiry arose as the federal government advocated for loan forgiveness for former students while simultaneously asserting the need to honor its debt commitments amidst a dispute over the debt ceiling.
The Department of Education announced in November that loan repayments, after eight extensions, would resume 60 days following June 30 of this year, unless the ongoing litigation concerning the loan forgiveness program is resolved earlier.
The program’s implementation has faced legal challenges, with the Supreme Court currently reviewing lower-court orders that have blocked certain aspects of the program. The legislation used to enable Secretary Cardona to modify the federal student loan system during a national emergency originated in the aftermath of the 9/11 attacks.
Read more: US Public Service Workers Receive $42 Billion Loan Forgiveness Approval
Potential Impact on Loan Repayments
While the Biden administration maintains that its actions have been lawful, citing the pandemic as a national emergency, House Republicans argue that the administration exploited legislation intended to assist service members and veterans.
Secretary Cardona mentioned the HEROES Act, which grants him the authority to create a waiver similar to the support provided to small businesses affected by the pandemic the previous year.
When asked about specific proposals under consideration by the Department of Education, Secretary Cardona refrained from commenting publicly but acknowledged the importance of ensuring a well-executed restart of loan repayments after three years of suspended payments during two different administrations.
The Supreme Court is expected to issue its ruling on the legality of the program sometime in the summer, and if the ruling precedes June 30, repayments will resume 60 days thereafter.
According to the Department of Education, as of November, approximately 26 million individuals had submitted the necessary information to be considered for the program, of which 16 million had been approved.
However, the ongoing court orders have prevented the acceptance of additional applicants and the complete forgiveness of student debt.
Under the program, individuals with an annual income below $125,000 who received a Pell Grant during their studies were offered a potential cancellation of up to $20,000 of their debt.
