The Department of Education has now extended the student loan repayment moratorium, which was put in place in March 2020 and will continue until June 2023, for the eighth time.
The repayment moratorium, which presently costs about $5 billion each month, could cost $275 billion if it were extended through the end of 2024, as reported by the Committee for a Responsible Federal Budget.
According to Marc Goldwein, senior vice president of the Committee for Responsible Federal Budget, “Every time we extend this, it’s going to worsen the inflation outlook,”.
It will cost $195 billion to extend the halt through August 2023 as currently anticipated. According to the Committee for a Responsible Federal Budget, the extension of the pause could dramatically boost inflation, possibly leading the Federal Reserve to raise interest rates and putting more pressure on the economy to enter a recession.
According to EJ Antoni, research associate for regional economics at the Heritage Foundation’s Center for Data Analysis, the most recent extension will put more of a strain on taxpayers.
“Despite repeatedly promising not to extend the moratorium, much like Lucy promising not to pull the football away from Charlie Brown, Biden has yet again broken his word and announced the eighth extension of the moratorium,” the DCNF was informed by Antoni. “The pause on payments is now extended potentially through August 2023, 42 months after it began in March 2020. By the end of August, the lost interest payments alone will have cost taxpayers $210 billion. This perpetual moratorium is an end run around the courts, which have ruled Biden’s student loan bailout unconstitutional because no one has to make payments.”
Since March 2020, the repayment gap has been extended eight times, the most recent being in November. After the Department of Justice requested the U.S. Supreme Court to reverse a lower court’s decision that prevented the student debt forgiveness plan from continuing forward, the repayment suspension was extended.
With plans to erase up to $20,000 of student loans for recipients of Pell Grants and up to $10,000 of student loans for people earning less than $125,000 annually, the Department of Education unveiled its student loan forgiveness program in August.
The scheme has now been contested in court; on October 22, the U.S. Eighth Circuit Court of Appeals stopped the student loan forgiveness program, preventing the government from “discharging any student loan debt.”
More on this story via The Western Journal:
The DOE responded by closing down the student loan forgiveness application on Nov. 12; however, the DOE has begun to send out emails to applicants approving them for student loan forgiveness.
“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong,” Secretary of Education Miguel Cardona said in a news release. “I want borrowers to know that the Biden-Harris Administration has their backs and we’re as committed as ever to fighting to deliver essential student debt relief to tens of millions of Americans.”
If the Biden administration continues to extend the repayment pause, Goldwein told the DCNF that students may take more loans out because they believe they may never have to pay it back, which could cause more problems. CONTINUE READING…