Student Loan Repayment Pause Could Be Extended Again (But 4 Factors Make It Unlikely)

Mandatory Credit: Photo by Evan Vucci/AP/Shutterstock (13795181g)President Joe Biden delivers remarks to the 2023 International Association of Fire Fighters Legislative Conference, in WashingtonBiden, Washington, United States - 06 Mar 2023.
Evan Vucci/AP/Shutterstock / Evan Vucci/AP/Shutterstock

While the U.S. Supreme Court weighs the legal merits of the Biden administration’s federal student loan forgiveness plan, millions of borrowers are likely wondering what happens next if the plan gets struck down. One possibility is that the administration will extend the loan repayment pause that has been in effect for three years, but that’s no sure thing.

Payments are set to resume 60 days after the Supreme Court’s decision if the court rules in the Biden administration’s favor. If the debt relief program is shot down, or pushed out past June 30, 2023, student loan payments are slated to resume 60 days after that.

There has been plenty of chatter that President Joe Biden might extend the payment pause yet again if the SCOTUS rules against his loan forgiveness plan. Doing so would give borrowers more time to prepare for the resumption of payments that were last made in early 2020.

But a number of factors could block the administration from extending the payment pause past its current expiration date. Here’s a look at four of them.

Major Questions Doctrine

This doctrine, also known as the major rules doctrine, is intended to limit the power of government agencies to make important changes. If an agency seeks to decide an issue of “major national significance,” its action must be supported by clear congressional authorization under the doctrine, according to the Congressional Research Service.

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As The New York Times recently reported, the Supreme Court first invoked the doctrine by name in a majority opinion that limits the Environmental Protection Agency’s power to address climate change. Last week, the SCOTUS hinted that it might use it again to kill the loan forgiveness plan, thereby limiting the Department of Education’s power.

Heroes Act

Biden’s loan forgiveness plan uses the Heroes Act of 2003 — enacted in the wake of the Sept. 11 attacks — as the authority granting student loan relief. The act grants certain powers in the event of war or national emergency, and in this case, the national emergency was the COVID-19 pandemic.

The problem here is that the national COVID emergency is due to end on May 11, 2023. When that happens, the authority to cancel student loan debt under the Heroes Act also ends, according to student loan expert and Forbes contributor Mark Kantrowitz.

Legal Challenges

This is already a clear and present threat after SoFi Bank filed a federal lawsuit to end the payment pause last week. SoFi asserts that the eighth extension of the moratorium is “not in accordance with the law, is without observance of procedure required by law, is arbitrary and capricious and is invalid,” according to court filings.

SoFi, a private lender, further contends in the lawsuit that the moratorium on the student payment has “substantially injured” the company. In its filing, it claims to have lost $300 million to $400 million in total revenues from its federal loan refinancing business. Now that SoFi has made the first move, other lenders could follow suit, which would put a further payment pause in serious jeopardy.

Save for Your Future

GOP Pushback

If the Biden administration succeeds in extending the repayment pause, it could face the wrath of Republican lawmakers who oppose continued extensions. As Forbes noted, the GOP-led U.S. House could respond by defunding much of the Education Department and federal student aid programs. This in turn could cause the administration to forgo any more pauses.

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