A deal that averts default on the national debt failed to undo President Joe Biden’s student loan forgiveness plan, to the disappointment of some House Republicans.
But Biden did agree, after weeks of negotiations with House Speaker Kevin McCarthy (R-CA), to reinstate student loan payments for millions of borrowers who have avoided the obligation to make payments on their loans since the pandemic.
DEBT CEILING DEAL: READ THE FULL LEGISLATIVE TEXT AIMED AT AVERTING A DEFAULT
Starting in August, the pause on student loan repayments would end. The deal stipulates that repayments are to begin 60 days after the signing of the bill, and the Treasury Department has said Congress must lift the debt ceiling the first week of June to escape default.
Republicans had fought for months to end the moratorium on student loan payments, arguing the pandemic no longer had any effect on borrowers’ ability to repay.
However, Biden’s plan to forgive up to $20,000 in student debt for many people remains intact under the deal.
A federal judge hit the brakes on that plan last year amid legal challenges to Biden’s ability to order such a sweeping policy on his own. Biden had said individual borrowers making less than $125,000 who received federal loans could have $10,000 of their debt forgiven, or $20,000 if the borrower also received a Pell Grant.
Supreme Court justices heard arguments in that case earlier this year and are expected to issue a ruling on the legality of the program by the end of the summer.
So while the high court could still put a stop to a program that Republicans have called unfair and expensive, some GOP lawmakers could view it as a loss that McCarthy did not secure a definitive end to it during debt ceiling negotiations.
And the reboot of student loan payments isn’t a slam dunk for Republicans, either.
Education Secretary Miguel Cardona said earlier this month that the administration was eyeing the end of August as a target for reinstating the payments, which the White House had said should remain suspended while the Supreme Court considered the forgiveness program.
That means that Republicans, at best, moved the start date for student loan payments up several weeks. The effect of that change could prove minimal, as the Education Department is likely to push for some time to transition back into facilitating the payments.
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However, more than by the failure to change course on Biden’s student loan scheme, Republicans were angered by the minimal cuts to future spending in the final version of the deal.
House Republicans had wanted to reduce the deficit by more than $4.8 trillion over the next decade. The debt ceiling deal will not approach that level of saving and includes modest spending caps that expire after 2024.
