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Biden extends student loan pause as court battle drags on ” Alaska

WASHINGTON (AP) — President Joe Biden announced Tuesday that his administration would extend a pause in federal student loan payments while the White House fights a legal battle to salvage his plan to cancel portions of the debt.

WASHINGTON (AP) — President Joe Biden announced Tuesday that his administration would extend a pause in federal student loan payments while the White House fights a legal battle to salvage his plan to cancel portions of the debt.

“It’s not fair to ask tens of millions of borrowers who are eligible for relief to resume their student debt payments while the courts review the lawsuit,” Biden said in a video posted to Twitter.

The moratorium was scheduled to expire on Jan. 1, a date Biden set before his debt relief plan stalled amid legal challenges from conservative opponents.

Now it is extended to 60 days after the dispute is settled. If the lawsuit is not resolved by June 30, payments would resume 60 days after that.

Biden’s plan promises $10,000 in debt relief for students earning less than $125,000 or households earning less than $250,000. Pell Grant recipients, who typically demonstrate greater financial need, are eligible for an additional $10,000 relief.

More than 26 million people have already applied for the relief, and 16 million have been approved, but the Department of Education halted processing of applications this month after a federal judge in Texas struck down the plan.

The Justice Department last week asked the Supreme Court to consider the matter and reinstate Biden’s debt relief plan. By extending the pause, the administration is giving the court an opportunity to resolve the case during its current term.

“I am absolutely confident that my plan is legal,” Biden said Tuesday.

Biden announced the decision a day after more than 200 stakeholders urged him to extend the pause, warning that starting payments in January would cause “financial disaster” for millions of borrowers.

The White House has argued in court that Americans continue to feel the financial stress of the pandemic. Without Biden’s deletion plan, they say, the number of people defaulting on student loans could soar to historic levels.

The greatest risk is for about 18 million borrowers who have been told their entire loan balance would be forfeited. Even if payments resume, those borrowers could think they’re in the know and ignore the bills, the Department of Education has warned.

At the same time, the White House is warning that extending the suspension of payments will cost billions of dollars in lost revenue every month. The moratorium has already cost the government more than $100 billion in lost payments and interest, according to the General Accountability Office.

The Biden administration did not address the cost in its announcement, instead blaming Republicans who questioned the plan.

“Unscrupulous efforts to block student debt relief in courts have created tremendous financial uncertainty for millions of borrowers who are unable to set their family budgets or even plan for the holidays without a clear picture of their student debt obligations,” Education Minister Miguel Cardona said .

“It’s just wrong,” he added.

Critics including the Federal Budget Responsibility Committee have opposed a further extension because it could worsen inflation and increase the risk of an economic recession.

But supporters of Biden’s plan welcomed the action, saying it offers working-class Americans a cushion.

“This extension means struggling borrowers can keep food on their tables throughout the holiday season — and months ahead — as the administration does everything in its power to deter the baseless and backward attacks on working families with student debt,” he said he Mike Pierce, executive director of the Student Borrower Protection Center.

The legitimacy of broad student debt relief was being questioned even before Biden took office. Proponents say the federal law already gives the Department of Education great flexibility in canceling student loans, while opponents argue that only Congress has the authority to cancel debt of this magnitude.

In announcing its plan, the Biden administration invoked the HEROES Act of 2003, a post-September. November 2001 law intended to help members of the military. The Justice Department says the law provides sweeping authority to forgive student debt during a national emergency. Biden said the relief was needed to help Americans recover from the pandemic.

A federal judge in Texas this month refuted that reasoning, saying Biden had exceeded his powers. The HEROES Act “does not give the Executive Branch clear congressional authorization to create a $400 billion student loan forgiveness program,” wrote District Court Judge Mark Pittman, who was appointed by former President Donald Trump.

The Justice Department is asking a New Orleans appeals court to stay Pittman’s order while the administration appeals. It is separately asking the Supreme Court to overturn a federal court in St. Louis that halted Biden’s plan in response to a lawsuit by six Republican-led states.

Collin Binkley and Chris Megerian, The Associated Press

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