Why Biden Ended Student Loan Relief

President Joe Biden (Photo by ANGELA WEISS/AFP via Getty Images)

AFP via Getty Images

Here’s why President Joe Biden ended student loan relief.

Here’s what you need to know — and what it means for your student loans.

Student Loans

President Joe Biden made it final this week: temporary student loan relief will end, and federal student loan payments will restart beginning February 1, 2022. That may come as a major surprise to at least some of the 40+ million student loan borrowers who will be impacted by the decision. (No, Biden won’t extend student loan relief again). Here’s why Biden made the decision.

1. Student loan borrowers got 22 months of student loan relief

Since March 2020, student loan borrowers have enjoyed unprecedented student loan relief in response to the Covid-19 pandemic. Congress passed the Cares Act — a $2.2 trillion stimulus package — that included significant student loan relief for federal student loan borrowers. Among other benefits, student loan borrowers were not required to make any federal student loan payments, interest rates on federal student loans were set to 0%, and student loan debt collection for borrowers in default was halted. Congress passed this historic student loan relief for six months, but then President Donald Trump extended this temporary student loan forbearance twice through January 31, 2021 through executive action. Biden also extended this student loan relief twice through January 31, 2022, when it will expire after nearly two years. (5 worst things to do for your student loans).

2. Student loan borrowers will get more than $110 billion of student loan cancellation

It’s no secret that members of Congress — including Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) — have been leading advocates to persuade the president to enact wide-scale student loan cancellation. They want up to $50,000 of student loans cancelled for borrowers, while others are calling for total student loan cancellation of all $1.7 trillion of student loan debt. (Here’s a list of everyone who wants Biden to extend student loan relief). Despite these proposals, it’s important to note that student loan forbearance due to the Covid-19 pandemic resulted in more than $110 billion of student loan cancellation for borrowers. According to the U.S. Department of Education, that equates to approximately $5 billion of interest savings per month for 22 months. With $110 billion of student loan forgiveness through this student loan relief, Biden may believe that it’s time to turn off the spigot.

3. Biden has cancelled $12.5 billion of student loans

Since becoming president in January, Biden has cancelled $12.5 billion of student loans. (How to qualify for automatic student loan forgiveness). This is in addition to the $110 billion of student loan cancellation in response to the Covid-19 pandemic. Biden has cancelled student loans for public servants, borrowers with a total and permanent disability, and borrowers who were misled by their college or university, among others. (5 ways Biden could cancel more student loans). Biden has also made major changes to student loan forgiveness, which will help more student loan borrowers get their student loans forgiven. Some may argue that these changes could occur independently of student loan relief being extended. However, combined with student loan cancellation from the Cares Act, Biden is messaging that there has been substantial student loan relief for borrowers, which Biden has decided makes it reasonable to end student loan relief in January. This doesn’t mean there won’t be more student loan forgiveness — there will be — but it won’t be available to most student loan borrowers like it is under this temporary student loan forbearance. (Here’s how to get student loan forgiveness during the Biden administration). Some hope that Biden will cancel student loans before next month, but don’t expect Biden to cancel student loans before student loan relief ends.

4. There are other economic priorities besides student loan forgiveness

As president, Biden must care for the nation as a whole. There are 45 million student loan borrowers, who represent about 14% of the approximately 330 million Americans. Student loan borrowers and advocates say extending student loan relief is a financial necessity that will stimulate the economy, reduce disparities, and help student loan borrowers pay bills, get married, start a family, and save for a home and retirement. These are all important issues for a president to address. At the same time, Biden must balance the plight of student loan borrowers with the plight of other Americans and other economic priorities such as combatting inflation, controlling the Covid-19 pandemic and the emergence of the Omicron variant, rebuilding the economy, and considering additional stimulus, among other priorities. Reasonable minds can debate the relative importance of these priorities, but they exist, and the president must balance them somehow to address the economic needs of all Americans.

The bottom line: student loan payments for your federal loans are due starting in less than six weeks. You may agree or disagree with the decision, but make sure you understand all your options for student loan repayment. Here are some popular ways to save money on your student loans:

Student Loans: Related Reading

Biden won’t cancel student loans before student loan relief ends

How to qualify for automatic student loan forgiveness

How to apply for limited student loan forgiveness

Education Department will cancel $2 billion of student loans