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White House, GOP both claim victory on student loans in debt limit bill

The hot-button issue of student loans has found its way into the high-stakes debt ceiling deal, with Republicans claiming a victory that the end of the pandemic-era payment pause is locked in and the White House arguing that no concessions were made.

The debt deal outlines that the pause ends 60 days after June 30, which takes off the table another extension that advocates were hoping to extract from President Biden. 

Biden had outlined in November that payments would resume either 60 days after the Supreme Court rules on his student loan forgiveness plan or 60 days after June 30, whichever came first. But the final bill text doesn’t factor in the high court decision at all.

The locked-in date is causing fury among student loan advocates who were looking for another reprieve and creating more concerns for borrowers as the bill faces hurdles on its way through Congress.

“Borrowers got sold out. That’s, I mean, the general feeling that I’m having, and I know a lot of our supporters are having today,” said Natalia Abrams, president of the Student Debt Crisis Center.

The White House on Tuesday argued that “people need certainty” when it comes to student debt relief. 

“This bill does end the payment pause but very close to the time frame we were going to end it as an administration when it comes to repayment,” said Director of the Office of Management and Budget Shalanda Young, likely referring to Biden’s original plan to restart payments based off the Supreme Court decision if it was released before June 30.

Some provisions on student loans that were in recent Republican-passed budget legislation, dubbed the Limit, Save, Grow Act, were nixed in negotiations. The White House touted that it was able to protect ​​the income driven repayment plan and the administration’s ability to pause loan payments if necessary in the event of a future emergency.

The repayment plan option for borrowers making certain salaries is a proposed rule from the Biden administration, which has gone through the rule-making process, and was a target by Republicans.

“[T]his rule was intended to really tie payments to true income. Look, it matters to people whether they pay 50 or 500 dollars a month,” Young said about protecting the option in the bill.

But the Biden administration is characterizing protecting income driven repayments as a win and downplaying the concession of the student payment pause that has left some feeling slighted. 

“To be just frank, it feels like they’re screwing us over with a smile,” Abrams said.

“Trying to say you’ve won here when, in fact, for so many borrowers, that payment pause has actually been by far more relief for borrowers that owe $100,000 or $200,000 than the one-time debt cancellation — and plus a lot of people don’t have faith in that,” she added.

Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, said on Tuesday that the group is “very concerned” about the payment pause provision in the budget deal. She noted that progressive Democrats have pushed for another extension to the pause.

“Our belief is that there needs to be some time to at least extend the pause until the administration can get their other debt repayment plan sort of up and running so that people aren’t being thrown into this limbo or back and forth seesaw of, you don’t need to pay … your student debt payments, now you need to pay them, now you don’t need to pay them,” Jayapal said.

The pause has been in place since March 2020, under former President Trump, and extended several times under Biden.

Meanwhile, the Biden administration is touting another win from the deal: that it is saving its student loan forgiveness program from certain death by House Republicans.

However, the fate of that relief is still at the mercy of a majority-conservative Supreme Court that displayed much skepticism during February oral arguments that the Biden administration has the power to forgive up to $20,000 in student loans. 

“You know, saving debt cancellation, I’m not quite sure what that means when it’s in the hands of the Supreme Court right now,” Abrams said. 

Young on Tuesday said the final bill does not deal with the program held up in the Supreme Court, although Republicans in Congress have directly targeted the president’s plan.

“The Supreme Court will opine on the president’s action to forgive $10,000 in student debt and $20,000 for those with Pell Grants,” she said.

The situation is still very volatile as some Republicans have expressed discontent with the deal McCarthy and Biden reached, extending the stressful situation for the 40 million student borrowers who have been on a roller coaster since Biden announced student debt relief last August. 

While some more conservative members are opposing the debt ceiling deal, Rep. Virginia Foxx (R-N.C.), the chairwoman of the House Education and Workforce Committee, praised it for solidifying the end of the three-year pause. 

“President Biden has extended the pause a half a dozen times, costing taxpayers — the majority of whom never stepped foot in college — $5 billion every month. The president says that it was his plan all along to return to repayment by the end of the summer,” Foxx said. 

“While I wish I could take his words at face value, his past actions have showed me otherwise. Passing the Fiscal Responsibility Act is the only sure-fire way to force a return to repayment and prevent the president from issuing another illegal extension,” she added.

On Sunday morning before the final bill text was released, Speaker Kevin McCarthy (R-Calif.) added more confusion to the timeline when he said the payment pause is “gone” within 60 days of the bill being signed. That would put its termination 60 days after June 5, not after June 30, if lawmakers meet the deadline to pass it.

The Speakers’ office did not respond to a request for clarification on McCarthy’s comment.

Student loan forgiveness has been a controversial topic for Biden ever since he made debt relief a campaign promise on the trail in 2020, offering less loan forgiveness than his more progressive primary opponents. Since then, Democrats have wanted to see more from the president and considered his forgiveness plan only a first step to help borrowers.

Biden has been under enormous pressure to keep extending the payment pause since he took office, only putting a hard deadline on the pause ending when he announced his student debt relief plan. 

If his plan falls through and the pause ends, the president will have to work quickly to propose an alternative student loan forgiveness program to work toward his pledge. 

The certainty of the pause ending if the bill passes through Congress crushes the hopes of advocates who were looking for Biden to extend it again.

“This was a shock to us. We definitely are upset that, you know, kind of in the last minute borrowers were used as a bargaining chip. It’s really upsetting,” Abrams said.

Source: The Hill

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