Biden Student Loan Pause: The Biden administration is facing another lawsuit over its decision to extend the pandemic-related pause on federal student loan payments. While the moratorium will end at the end of this year, the plaintiffs want it to end immediately. The latest legal challenge was filed by the New Civil Liberties Alliance on behalf of the Mackinac Center for Public Policy, a free-market think tank, earlier this week. Private lender SoFi had already sued the Biden administration last month, also seeking to end the payment pause.

The moratorium has been extended eight times under the Trump and Biden administrations since March 2020, when it was put in place to help people struggling with the Covid-19 pandemic. However, the New Civil Liberties Alliance lawsuit argues that the Department of Education has illegally extended the pause, based on an “ever-changing base of alleged legal justifications.”

The lawsuit alleges that the pause hurts nonprofit employers, such as the Mackinac Center for Public Policy, which typically use a federal debt relief program for nonprofit workers to help recruit employees. The pause, they argue, reduces the incentive of the federal program, known as Public Service Loan Forgivenessprovides borrowers to work for a non-profit organization.

The Education Department, on the other hand, has maintained that the pause, as well as a proposed one-time debt cancellation plan, are legal. In response to the latest lawsuit, the agency released a statement, saying the lawsuit is “an attempt by partisan special interest groups to put millions of borrowers at serious risk of financial harm” and that the Department will continue to fight to provide relief. to borrowers, provide a smooth path to repayment, and protect borrowers from industry and special interests.

Thanks to the pause, most federal student loan borrowers have not had to make payments for more than three years. Interest has also been frozen during that time. However, the imminent end of the moratorium has caused concern among borrowers, who may find it difficult to make payments once the pause is lifted.

The latest extension to the pause was implemented by President Joe Biden in November, after his separate student loan forgiveness program was also challenged in court. The administration has now tied the payment restart date to litigation over the forgiveness program, which was heard by the US Supreme Court in late February.

Federal student loan payments will resume 60 days after the Supreme Court issues its ruling, or the end of August, whichever comes first. The judges are expected to rule in late June or early July, but the decision could come earlier. If you are allowed to move on, Biden Student Loan Forgiveness program would cancel up to $20,000 for qualified low- and moderate-income borrowers.

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