Student loans are returning to the forefront after the sudden extension of the moratorium on evictions.
Here’s what you need to know.
Gone today, back tomorrow. The moratorium on evictions – which, due to the Covid-19 pandemic, temporarily prevented landlords from evicting late renters – expired on July 31, 2021 without any action from Congress. With the end of the federal moratorium on evictions, a logical conclusion could be drawn for millions of student loan borrowers waiting in limbo: Like the moratorium on evictions, student loan relief would also expire on September 30, 2021. without any formal extension. The argument goes: with the expiration of the moratorium on evictions, tenants would find themselves without this federal protection and could lose their homes. Likewise, with the planned expiry of student loan relief, millions of student loan borrowers will be faced with the following starting October 1:
- federal student loan payments will resume;
- Federal student loan interest rates, which were temporarily 0%, will return to their usual pre-pandemic interest rates; and
- collection of delinquent student loans may resume, which may include wage garnishment, for example.
As Senator Elizabeth Warren (D-MA) and others have argued, failure to extend student loan relief will lead to financial calamities, including default and default on student loans. Warren also said student loan managers are not prepared for student loan borrowers to repay student loans. Warren and others are calling for an extension of student loan relief until at least March 31, 2022. That said, the end of the eviction moratorium appears to be a heat up on what will happen with student loan relief next month.
Then the moratorium on evictions was suddenly extended – after its expiration.
Student loans: what happened with the moratorium on evictions and why it matters
The Centers for Disease Control and Prevention (CDC) instituted the federal moratorium on evictions last year, and it was set to expire on December 31, 2020. However, Congress extended the moratorium on evictions until January 31, 2020, then the CDC extended the eviction. moratorium three times thereafter. Like the moratorium on evictions, student loan relief was to be temporary. The Cares Act – the $ 2.2 trillion stimulus package – only authorized temporary forbearance of student loans and other student loan relief from March 2020 to September 30, 2020. However, President Donald Trump has extended this student loan relief twice: first from September 30, 2020 to December 31, 2020, and then from January 1, 2021 to January 31, 2021. When Biden became president in January, Biden extended this student loan relief by eight months until September 30, 2021.
As the July 31 eviction moratorium nears expiration, several members of Congress have pushed to extend the moratorium on evictions, which they say will provide an economic lifeline for Americans struggling financially. due to the Covid-19 pandemic. Members of Congress have argued the same for extending student loan relief. Biden also called on Congress to extend the moratorium on evictions, but failed to do so up to three days before its expiration. Congressional Democrats struggled to rally support for the extension, but failed to convince moderate and conservative Democrats.
Student Loan Relief: Hope for Student Loan Repayments to Be Deferred Again
What brought the moratorium on evictions back to life? One reason may be the protracted protests by several members of Congress, such as Representative Cori Bush (D-MO), who continued to pressure the Biden administration to extend the moratorium on evictions. After the expiration Friday, the CDC extended the moratorium on Tuesday by two months until October 3. The extension will only apply to US counties with substantial or high levels of Covid-19 transmission. The short-term extension is intended to give tenants more time to obtain financial relief from existing federal stimulus funds. It’s curious that the CDC extended the moratorium on evictions – not on the substance, however – but given that the Biden administration has expressed doubts about the CDC’s legal ability to extend the relief. In June, the United States Supreme Court ruled 5-4 not to end the moratorium on evictions. However, Judge Brett Kavanaugh wrote a concurring opinion in which he said he voted not to end the moratorium as it would expire on July 31. Kavanaugh wrote that Congress is expected to pass new legislation to extend the federal moratorium on evictions beyond July 31. The CDC disregarded Kavanaugh’s advice and still proceeded with a two-month extension.
Could extending the moratorium on evictions give a boost to an extension of student loan relief? Yes. Like the moratorium on evictions, progressive members of Congress could step up political pressure for Biden to expand. If Biden extends student loan relief, here are 5 options. Warren, Senate Majority Leader Chuck Schumer (D-NY) and others pressured Biden for student loan relief and student loan cancellation. This victory over the moratorium on evictions could be an inflection point for progressives to pressure the president to extend student loan relief on the same grounds. However, the moratorium on evictions and student loan relief are different in several ways. For example, the eviction moratorium prevents landlords from evicting tenants who have not paid rent (a financial obligation, but not a loan). Most of the owners are individuals or private companies. On the other hand, the reduction of student loans is linked to the repayment of student loans due to federal government. Given this difference, it is possible that the moratorium on evictions has been extended, but not the relief on student loans.
Will Biden extend student loan relief?
This hidden clue suggests that Biden will not extend student loan relief. Extending the moratorium on evictions could set the stage to change that, however, if there is momentum to continue federal financial support in the wake of the Covid-19 pandemic. Unlike the moratorium on evictions, Biden did not call on Congress to extend student loan relief beyond September 30. One reason may be that it has executive power to extend student loan relief and therefore does not need congressional approval. For example, he extended student loan relief once this year. The question is whether he wants to extend the student loan relief, thinks it’s necessary in light of the Covid-19 pandemic, and whether he would extend the relief. There are also political questions regarding any extension of student loan relief. The Biden administration is fighting the Covid-19 pandemic, but also argues that the economic recovery is well underway. The rationale for extending student loan relief would be linked specifically to the Covid-19 pandemic, not the general injustice or the heavy burden of student loan debt. This creates an optical problem: if student loan relief is extended, it could imply for some observers that the economy is not strong enough to allow millions of student loan borrowers to pay their monthly payments. student loan. The counter-argument is that the economy and unemployment could recover further, but student loan borrowers are not prepared to resume student loan payments after an 18-month stay. For example, a recent survey showed that 90% of student loan borrowers are not ready to repay their student loans as of October 1. ,” or both.
Biden could announce an extension of student loan relief, but there are no guarantees. Currently, student loan relief will end on September 30. Make sure you are prepared for student loan repayment. Evaluate all of your options and make the right financial decision for your unique personal situation. Here are some popular options for saving money with your student loans: