Advocacy groups call for student loan payment pause extension as forgiveness plan grinds to a halt

The federal student loan payment pause would cost the government an additional $120 billion if it's extended through 2024, expert says

A block on President Biden's student loan relief plan has led some advocacy groups to call for an extension to the payment pause, which expires on Dec. 31. (iStock)

Student loan borrower advocacy groups have called for an extension of the federal student loan payment pause, which is set to expire at the end of December.

The call to action by the groups comes after a federal appeals court on Monday agreed to extend a temporary block on President Joe Biden's plan to forgive student debt for millions of borrowers. The appeals court ruled in favor of six Republican-led states - Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina - that sued to stop the relief plan. 

The plan would cancel up to $10,000 in federal loans per borrower and up to $20,000 per borrower for those who used Pell Grants in college. The plaintiffs argued that the Biden administration's student loan relief plan would financially harm their states.

Monday's decision is the latest action challenging the administration's student loan forgiveness plan and follows last week's decision by a Texas federal judge to block the loan relief. 

The rulings mean that "tens of millions of student loan borrowers across the country now have their vital debt relief blocked," Persis Yu, the deputy executive director of the Student Borrower Protection Center, said in a statement.

"The Biden Administration cannot now resume payments on January 1st. It must use all of its tools to fight to ensure that borrowers receive the debt relief they need," Yu continued.

Other student loan borrower advocacy groups have voiced a similar call to action to the Biden administration.

"Alongside an appeal in this case, the administration should also consider further mechanisms to promote fairness, including a delay in the resumption of loan payments next year," American Federation of Teachers President Randi Weingarten said in a statement.

If you have private student loans that don't qualify for federal student loan forgiveness, you could consider refinancing to a lower interest rate to reduce your monthly payments. You can visit Credible to find your personalized interest rate without affecting your credit score.


Without forgiveness, borrowers could face defaults, expert says

Without an extension of the student loan payment pause past Dec. 31, borrowers will possibly have to make payments on loans they were told would be forgiven. The unexpected loan payments could lead to a spike in loan defaults, according to Leslie Tayne, the founder and head attorney at Tayne Law Group.

"If borrowers are expected to resume their student loan payments without any broad loan cancellation in sight, we can probably expect an uptick in delinquencies," Tayne said. "Multiple surveys have found that a significant portion of borrowers are not financially ready to start making payments." 

Restarting payments without a clear path to forgiveness "would quickly return us to the pre-pandemic status quo, which isn't anything to get nostalgic about," Chris Motola, a financial and loans analyst with, said. 

"Add in the shaky economy, the problem could quickly compound, especially if we enter a period of elevated unemployment," Motola continued.

If you have private student loans, federal debt forgiveness programs won't apply to you. Instead, you could consider refinancing to lower your monthly payments. You can visit Credible to find your personalized interest rate without affecting your credit score.


Biden has options with the student loan payment pause, experts say

The administration could opt to extend the payment pause for the remainder of Biden's time in office if the forgiveness plan is permanently blocked, according to student loan experts.

"Extending the deadline indefinitely could be used by the administration as leverage to bring Republicans to the bargaining table and pacify an angry, young Democratic base," Motola said. 

The option is legal "for as long as a Presidential national emergency declaration is still in effect," which comes up for renewal in February, Mark Kantrowitz, a leading expert on student loans, said.

Extending the payment pause for the rest of Biden's term would cost an additional $120 billion, bringing its total cost to nearly $300 billion, according to the Committee for a Responsible Federal Budget (CRFB). 

"With inflation at a 40-year high and unemployment near historic lows, there is absolutely no justification for extending the student debt pause yet again," Maya MacGuineas, the president of the CRFB, said in a statement

"The pause was put in place as an emergency measure early in the pandemic. As the President has repeatedly pointed out, the pandemic recession is long over." MacGuineas continued. 

If you are struggling with private student loans, you could consider refinancing to a lower interest rate to reduce your monthly payments. You can visit Credible to find your personalized interest rate without affecting your credit score.


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