Ferox Principal Debra Dixon was mentioned in a recent The Hill news article titled “Pause on student loan payments about to end for millions.”
“Restarting loan payments now that the emergency period related to the pandemic has officially ended would be consistent with other actions the Biden administration has taken recently, even in the face of potential political fallout. I don’t foresee another extension, and the administration is trying to give borrowers as long of a runway as possible.”
Check out the full article here and below.
Pause on student loan payments about to end for millions
BY Lexi Loans and Alex Gangitano
May 17, 2023
The Biden administration has given its clearest indication yet that the years-long pause of student loan repayments will come to an end in the coming months.
Optimism that the White House would keep offering borrowers relief from making their payments was crushed last week, when Education Secretary Miguel Cardona told a Senate panel that the payments would officially resume due to the pandemic emergency being over.
That means borrowers, who have been jolted around since March 2020 with last-minute extensions and uncertainty over exactly when they should expect payments to start up again, will finally have to make payments — many for the first time.
President Biden said in November that payments would resume either 60 days after the Supreme Court rules on his student loan forgiveness plan — which would permanently eliminate some debt — or 60 days after June 30, whichever came first.
But student loan groups had been optimistic the president was bluffing again, hoping for another extension from Biden amid his 2024 reelection campaign.
That optimism turned to fury after Cardona’s speech at the Senate Appropriations hearing Thursday.
Cardona’s comments “are grossly out of touch and concedes a lot. It’s going to lead to a really large political defeat,” said Braxton Brewington, press secretary of The Debt Collective.
Despite the backlash, the Education secretary doubled down on his statement during a House hearing Tuesday, after Education Committee Chairwoman Virginia Foxx (R-N.C.) asked if he will “commit to no more extensions of the repayment pause.”
“We communicated that after the Supreme Court decision is made, loan repayments will start within 60 days of the decision,” Cardona responded.
Advocates have emphasized research from the administration showing that many borrowers will default on their student loans if they resume this summer, particularly if the Supreme Court blocks Biden’s relief plan. Concerns have also been raised that student loan student loan servicers are not ready to turn back on the accounts.
“We’re confident, senator, that the Supreme Court will rule in favor of the targeted debt relief, providing relief for millions of borrowers,” Cardona said last week.
In February, the Biden administration stood in front of the high court to defend its program against two lawsuits: one by six Republican attorneys general who claim their states will be negatively affected by a loss of tax revenue from the debt relief, and another by two student borrowers who say there wasn’t a required comment period for them to voice their opinions on the program.
With the cases at the mercy of the conservative-leaning Supreme Court, there is high skepticism over Biden’s chances of victory, further raising the stakes of the Education secretary’s comments.
It was “premature” for Cardona to rule out another extension, Brewington said. He argued that if the court rules against debt relief, it is “incredibly irresponsible” for the administration to restart payments, and if the court rules for it, borrowers still need time for the relief to hit their accounts.
Robert Moran, a former senior policy adviser in the Education Department under President George W. Bush, predicted the resumption of payments will be “a morass” for borrowers.
“Many borrowers will have difficulty making payments,” he said. “Making matters worse is that the Department is not communicating with these actors. This lack of communication will only result in further confusion for all involved.”
Other experts note that the administration’s handling of the expiration of the Trump-era Title 42 immigration policy shows a willingness to take heat from the left.
“The Biden administration has shown it won’t back away from taking action, even if it might be politically fraught,” said Debra Dixon, who served as a chief of staff in President Obama’s Education Department.
She argued that another extension would be inconsistent with the administration’s other actions post-COVID emergency.
“Restarting loan payments now that the emergency period related to the pandemic has officially ended would be consistent with other actions the Biden administration has taken recently, even in the face of potential political fallout. I don’t foresee another extension, and the administration is trying to give borrowers as long of a runway as possible,” said Dixon, now a principal at Ferox Strategies.
The president campaigned on student loan forgiveness in 2020 and was pushed by progressives to forgive up to $50,000 of a borrower’s loans. Although some were disappointed when he announced his plan only included forgiveness of up to $20,000, they still looked at it as a positive step and necessary relief.
Whether the restarting of payments impacts Biden’s reelection campaign is contingent on if voters still have the issue top of mind by Election Day. Some advocates say young voters would make it a major issue.
“Our argument is that it is a really poor political strategy for people to be getting student loan bills in the mail at the same time as they’re getting their ballots, and that’s going to lead to huge Democratic disillusionment and decreased turnout,” Brewington said.
But while Cardona’s comments are concerning to some, not all hope is lost.
Moran said speculation is still swirling about whether the administration really will resume payments this time. But, he argues, such a move is due.
“It is past time. Will be three and half years before the first payment is due. Pandemic is over, so we need to return all aspects of life to a level of normalcy,” said Moran, a principal at Bose Public Affairs Group.
But Brewington disagrees and says there’s still time for the White House to reverse course and extend the pause — after all, they’ve done it before.
“They’ve said final and then final in all caps and final in bold and then extended the pause,” Brewington said. “There’s no reason they can’t do it again.”