While its Student Loan Forgiveness plan is stuck in court, the Biden administration is not sitting on its hands. Yesterday, the administration announced that it would extend the student loan payment moratorium, often called the “payment pause,” to as late as August 29, 2023. The payment pause, which stops both payments and interest accrual on federal student loans, was a response to the COVID-19 pandemic that began in March 2020. While most other pandemic emergency measures have wound down, inexplicably, it’s the payment pause that has continued with six, now seven extensions by the administration. Even without focusing on how politically manipulative it is, this extension is simultaneously poor policy and incredibly expensive policy.

First, the rationale behind the extension is farcical. The administration is quite literally treating student loans as a pandemic emergency. The pandemic is the justification for both the administration’s $400 billion dollar student loan forgiveness proposal that is now held up in the courts, and for the payment pause that the administration is using to pressure the courts. According to the president, the pandemic is over, but apparently not over enough to return the $1.6 trillion student loan portfolio to the terms those loans were made under.

Second, the extension is even more regressive than President Joe Biden’s regressive forgiveness plan. The forgiveness plan has some income targeting with its doubly generous terms for Pell Grant recipients, who were low-income when they attended college. The Committee for a Responsible Federal Budget calculated that 57 to 65 percent of Biden’s loan forgiveness would go to those in the top half of the income distribution, but about three-quarters of the repayments that are paused would go to above-average earners. Recent graduates with advanced degrees, and oftentimes more debt, will receive a windfall compared to those with bachelor’s degrees. Of course, Americans without a degree or those who paid off their loans, or never took any, will see no benefit.

This is poor policy, but it’s also expensive policy. How expensive? All in, the pause could cost $195 billion, and that is if this “final” extension is really final, unlike the previous “final” extension. Looking just at this extension, potentially from January to August 2023, the cost will be around $40 billion.

Looking into comparisons to other national expenditures, this additional pause will cost 150 percent more than the Federal Government spends annually on Pell Grants, its primary vehicle for making college affordable for low-income college students. One could either desire to curb spending—“This costs more than we spend on Pell Grants!”—or desire additional spending—“We could double Pell spending next year!”—and still agree that this pause is a huge amount of money poorly spent.

However, especially given the inflation households are facing (which this pause could exacerbate), comparisons to household finances are particularly revealing. The cost for just this “final” extension of the payment pause amounts to more than $300 per household. That includes every household in the country. The cost amounts to $120 for every person in the US, every man, woman, and child—those who hold federal loans as well as those who do not. Of course, that’s not quite right, as those who hold student debt will realize savings, while those who do not bear a greater average burden.

The administration’s myopia on student loan debt has led the Biden administration to make another unilateral and incredibly expensive policy move that is unwarranted on its face and certainly in light of its pandemic justification. The Biden administration is playing for political points with the people’s money, and that root problem should not be extended.

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