Op-Ed: Student Loan Pause Has Benefitted Affluent Borrowers the Most, Others May Struggle When Payments Resume

Professor Sarah Turner offers insights into student loan payment policies.

Sarah Turner

Since March of 2020, payments and interest accumulation on most federal student loans have been paused. This “payment pause” provided immediate relief to millions of households with student loan debt at a time of great economic uncertainty due to the pandemic. Since then, the Biden-Harris administration sought to use executive action to forgive $10,000 to $20,000 in student loans for most borrowers and, when that was put on hold by courts last November, extended the loan pause for the eighth time. The fates of both the debt forgiveness plan and the loan pause are now legally uncertain and an end of the payment pause before the fall of 2023 is a scenario for which the Department of Education (ED), advocates, and borrowers must prepare.

Some student loan borrowers have high incomes and never suffered wage losses due to the pandemic, and rising wages and low unemployment mean that many borrowers have recovered from any short-term financial effects of the pandemic. Other borrowers—particularly those who were struggling with student loan payments before the pandemic—will face significant financial hardship with the restart of payments.  

For borrowers who are likely to struggle, relief through the loan cancellation plan proposed by the Biden administration is by no means assured while a further extension of the payment pause appears unlikely given ongoing litigation. For this reason, helping eligible borrowers enroll in existing programs that could help protect them from financial distress when payments resume needs to be the immediate priority for the Department of Education, along with the legislative branch of government. Doing so would not only mitigate hardship associated with the restart of payments, but it would also contribute to structural improvements in the administration and integrity of the federal student loan program.

Visit Brookings.edu to read the full op-ed where it was originally published.

News Information