House votes to overturn President Biden’s student debt forgiveness and end the payment pause—what borrowers need to know

FAN Editor

The House of Representatives passed a bill on Wednesday aimed at blocking President Joe Biden’s student debt forgiveness plan and ending the pause on federal student loan payments and interest.

The Republican-sponsored bill passed by a vote of 218-203 with two Democrats joining the Republican majority in favor of the resolution. It’s unclear whether the bill will pass the Democrat-controlled Senate, but if it does, the White House has already vowed to veto it. 

“This resolution is an unprecedented attempt to undercut our historic economic recovery and would deprive more than 40 million hard-working Americans of much-needed student debt relief,” the Office of Management and Budget said in a statement.

The resolution follows a Republican-led proposal last month that would have raised the debt ceiling, but blocked Biden’s student debt relief plan and changes to income-driven repayment. 

Currently, Biden’s plan to forgive up to $20,000 in student debt per borrower earning less than $125,000 a year rests with the Supreme Court. The court is expected to rule by the end of June. 

Here’s where things currently stand.

The payment pause will end this summer

Despite some hopes that the pause on student loan payments may be extended again if the Supreme Court strikes down debt forgiveness, the Biden administration has said the pause will end this summer.

“We are committed to making sure that once a decision is made that we’re going to resume payments 60 days after,” Education Secretary Miguel Cardona confirmed last week at a Senate Appropriations hearing. “But no later than June 30, we’re going to begin that process.”

House Republicans aren’t the first to call for an end to the payment pause, either. In March, SoFi Bank filed a lawsuit trying to compel the federal government to resume collecting payments immediately, calling the most recent extension of the pause “unlawful on multiple grounds.”

26 million borrowers have applied for debt forgiveness

In the brief window last fall when borrowers could apply for Biden’s loan forgiveness program, 26 million people applied to see their balances reduced by up to $10,000 (up to $20,000 for Pell Grant recipients).

The Biden administration approved 16 million borrowers for forgiveness before it was required to stop processing applications while the legal challenges play out.

While Biden’s student debt forgiveness plan has been a partisan issue since its announcement, it has now become especially polarizing as the parties argue over government spending.

“To the more than 40 million eligible student borrowers who are eagerly waiting to learn about the fate of their debt relief, I urge you…to watch which Republican lawmakers shamelessly vote against debt relief for you after having their own loans forgiven,” White House Press Secretary Karine Jean-Pierre said in a press briefing Wednesday.

Opponents of the forgiveness plan cite unfairness to non-borrowers and those who’ve paid off their loans. They claim Biden doesn’t have the authority to cancel the debt without congressional approval.

“President Biden’s student loan transfer scheme shifts hundreds of billions of dollars of payments from student loan borrowers onto the backs of the American people,” Rep. Bob Good, R-Va., who introduced the resolution back in March, said in a statement.

Nearly half of Americans approve of Biden’s forgiveness plan

As of mid-April, around 47% of Americans support Biden’s student debt forgiveness plan in its current form, according to a USA Today/Ipsos poll. Among those who currently have student debt, 83% approve of Biden’s plan, while 3 in 4 Americans without loans also support the relief, the poll found. 

Optimism, however, isn’t quite as strong, at least among young adults. More than two-thirds — 67% — say they don’t think Biden’s debt cancellation will come to fruition, according to a recent Scholarship Owl survey of over 11,000 college and high school students.

DON’T MISS: Want to be smarter and more successful with your money, work & life? Sign up for our new newsletter!

Get CNBC’s free report, 11 Ways to Tell if We’re in a Recession, where Kelly Evans reviews the top indicators that a recession is coming or has already begun.

This 22-year-old won $2 million in scholarships, graduated from Princeton and lives debt-free in NYC

Free America Network Articles

Leave a Reply

Next Post

A measure of inflation that is closely tracked by the Federal Reserve increased in April

WASHINGTON — A key index of U.S. prices ticked higher in April, and consumer spending rebounded, a sign that inflationary pressures in the economy remain high. The index, which the Federal Reserve closely monitors, showed that prices rose 0.4% from March to April. That was much higher than the 0.1% […]