President Joe Biden extends student loan forgiveness

President Joe Biden announced on Wednesday that he would extend the COVID-19 pandemic pause on federal student loan payments until August 31.

Biden moved to extend student loan forgiveness — previously set to end in May — after considering the pandemic’s continued economic effects and pushes from Democratic members of the United States Congress.

This pause on student loan payments will help 41 million borrowers avoid accruing further interest and prevent 7.5 million people from defaulting on their student loans.

The decision has drawn political backlash from both major political parties. While Republicans initially supported Biden’s extension, they have argued that it could have greater economic costs than benefits as the economy rebounds from the pandemic. 

Former President Donald Trump postponed student loan payments for 60 days at the onset of the pandemic in March 2020, extending the moratorium three times during his term. 

Several Democrats have said that Biden’s decision is too moderate. Led by Senate Majority Leader Chuck Schumer (D-N.Y.), congressional Democrats have urged Biden to cancel the $1.6 trillion in federal student debt entirely, a move they say would help to recover the economy and promote racial wealth equity.

Last year, when asked about student loan forgiveness, Biden said that he would not cancel student loans of students attending elite universities like Penn. The President’s comments drew backlash from first-generation, low-income students at Penn, who felt such a move ignores the reality of the financial burdens many students face at elite institutions.

Penn introduced a no-loan financial aid policy in 2008, a hallmark achievement of former Penn President Amy Gutmann. While loans are not part of Penn’s formal financial aid packages, 19% of Penn students who received aid took out loans during the 2020-2021 school year.