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Biden extends student loan moratorium: What does this mean for my Student Loan Forgiveness application?

With legal challenges placing a block on student loan debt relief, the White House has announced an extension to the repayment pause.

Update:
Biden extends student loan moratorium
ELIZABETH FRANTZREUTERS

President Biden has announced another extension to the student loan moratorium that has been in place since the start of the pandemic. It comes as the White House struggles to enact Student Loan Forgiveness due to multiple legal challenges.

To give borrowers some respite during a period of extreme economic insecurity, former President Trump imposed a pause on student loan debts. This meant that borrowers were temporarily freed from the requirement to make repayments and also that interest stopped accruing on the outstanding balance.

The moratorium had be scheduled to come to an end on 31 December, but the latest extension pushes back the deadline to “no later than June 30, 2023″. Repayments will not have to resume for 60 days after the moratorium is lifted.

In a video announcing the move, Biden said: “It isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student loan repayments while the court considers the case.”

Biden confident that the Supreme Court will rule in his favour

The long-awaited Student Loan Forgiveness initiative has faced huge opposition from Republican-led states since it was first announced in August. Biden had hoped to enact the relief before the moratorium finished at the end of 2022.

However after a federal appeals court in St Louis ruled that the Biden administration could not begin distributing the support, the White House has been forced to look for an alternative. Biden has appealed to the Supreme Court to rule on the case, requesting an expedited process.

In a letter to the Supreme Court, Biden’s Solicitor General Elizabeth Prelogar wrote: “The Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations.”

The six-month extension should be enough time for the Supreme Court to hear the case and issue the ruling, which Biden seems confident will go in his favour.

“I’m completely confident my plan is legal,” Biden said. “But right now it’s on hold because of these lawsuits. We’re not going to back down though on our fight to give families breathing room.”

This week the Department of Education began sending letters to applicants informing them if they had been approved for Student Loan Forgiveness. However the letters made clear that the administration was unable to enact the support until the Supreme Court had issued a ruling.

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