- Student-loan payments are resuming in 53 days.
- Advocates say new inflation data showing a 40-year high is cause for Biden to extend the payment pause.
- The Ed. Dept. still plans to resume payments on Feb. 1, but says it is monitoring the Omicron variant.
The last time Americans saw inflation this high was when Ronald Reagan was president, according to Friday data form the Bureau of Labor Statistics.
This has advocates for student-loan borrowers asking one question: Why is President Joe Biden still resuming payments in less than two months?
The Consumer Price Index, which measures US inflation, rose 6.8% year-over-year in November, showing just how much Americans’ wallets are being squeezed by higher prices across the board. Prices for gas, food, and energy all rose, and in 53 days, 43 million federal-student loan borrowers will have to add monthly student-debt bills back to their monthly expenses. This comes as the Student Debt Crisis Center found in a recent survey, 89% of borrowers with full-time jobs do not feel financially secure enough to resume payments next year, given that a large portion of their incomes will be dedicated to those monthly bills instead of basic goods.
“Today’s economic data make the strongest case imaginable for a change of course as the Biden Administration rushes headlong into a hasty and poorly timed restart of the entire student loan system,” Student Borrower Protection Center Executive Director Mike Pierce said in a statement.
“American families today are being forced to pay more to meet their basic needs, as rent, food, and energy prices skyrocket,” he went on. “Adding the burden of a student loan bill will stretch millions of families’ finances to the breaking point. Washington does not need this money; American families do.”
Student-loan payments have been on pause and accruing 0% interest since the pandemic began, but in August, Biden’s Education Department made clear the extension through January 31, 2022 is “final.” Advocates and lawmakers are urging the department to change its mind not only because of surging inflation, but because of uncertainty the new Omicron variant brings, as well.
“This debt is just overwhelming for people,” Senate Majority Leader Chuck Schumer said earlier this week. “If we don’t extend the pause, interest rates just pile up. Students owe a fortune. And with Omicron here, we’re not getting out of this as quickly as we’d like.”
Sandy Baum, a nonresident senior fellow for the Center on Education Data and Policy at the Urban Institute, told Insider that she’s worried about the transition back into repayment, especially for those who struggle with navigating the system. But she noted the availability of the income-driven repayment plan, in which borrowers can use this plan to make monthly payments based on what they can afford.
She added, though, that the plan “is not perfectly structured. There are barriers to getting in it, and there are barriers to staying in it.”
“If we want to be able to continue to offer loans, we have to have a system that requires people who are able to pay to pay,” Baum said. “If you don’t have any money and you don’t have a job, then of course you can’t repay and there needs to be provisions for that.”
The Education Department still plans to restart payments in February and told Politico in a statement that it is “still assessing the impact of the Omicron variant” and in the coming weeks “will release more details about our plans.”
Advocacy groups maintain that borrowers need answers now on a further extension.
Biden “should immediately extend the student loan payment pause to give families certainty that they won’t have to choose between paying for food and onerous student loans,” Remington Gregg, council for civil justice and consumer rights at Public Citizen, said in a statement. “Payments are set to resume in less than 60 days, even as another strain of the coronavirus hinders people’s ability to get back to work and return to normalcy. The choice couldn’t be clearer.”