For over a year now, borrowers with federal student loans have been enjoying a break from making payments. In March 2020, early in the pandemic-induced economic crisis, then-President Trump enacted a moratorium on repayment which halted interest accumulation and allowed all borrowers to stop making payments without penalty. President Biden extended that moratorium shortly after he took office in January 2021. And last Friday, under his direction the Department of Education (ED) declared that the payment pause will continue until the end of January 2022, making it the fourth and hopefully the final extension since the beginning of COVID-19.
It’s a shame we needed the pause in the first place. Higher
education experts and policymakers have long known that the income-driven
repayment program (IDR) was in need of reform and would fall short in a moment
of systemic crisis. The system is complex and difficult for borrowers to
navigate. And in a time when quick relief was important for both individuals
and the economy, IDR wasn’t up for the job.
The long-known insufficiency of the IDR program made the
moratorium on loan repayment a reasonable short-term intervention. But there’s
no reason why it should be continuing. In the time bought by the payment
moratorium, Congress and the White House should have shored up the IDR program,
or at the very least developed a plan to bring repayment back online without
overburdening any still-vulnerable borrowers.
It’s important to provide relief for borrowers who are truly
struggling. But this policy, like so many other popular progressive proposals,
fails to target those who are truly in need and is providing a payday, at
taxpayer expense, to many high earners.
Experts of all political persuasions agree that IDR is in need of reform and simplification, so it’s frustrating that we haven’t seen any fixes to address both the immediate and long term challenges with the student loan safety net.
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