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EDITORIAL

Trump should extend student loan payment freeze

Millions of Americans are set to resume making student loan payments on New Year’s Day.

Graduates line up to receive their diplomas at Berkshire Community College's commencement exercises, at the Shed at Tanglewood, in Lenox, June 1, 2018.
Graduates line up to receive their diplomas at Berkshire Community College's commencement exercises, at the Shed at Tanglewood, in Lenox, June 1, 2018.Gillian Jones/Associated Press

Back in March, Congress temporarily froze federal student loan payments, providing sorely needed financial relief to millions of borrowers through the end of September. President Trump extended the freeze until Dec. 31 through an executive order. Now, with little hope for another relief package from Congress before the next administration takes charge, Trump should sign a new executive order to extend the freeze one more time. Otherwise, huge numbers of Americans, and the student loan system as a whole, will face chaotic challenges between New Year’s Day and Jan. 20, when President-elect Joe Biden will be sworn in.

The pandemic hasn’t spared college graduates or those with some years of college under their belts. Student loan borrowers are among the millions of Americans who have lost their jobs. Families have struggled to pay bills or rent, and experts are expecting an eviction crisis after the federal moratorium on eviction expires at the end of the year.

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The so-called CARES Act helped ease some of this financial strain through stimulus checks and enhanced unemployment insurance, but since Congress and the Trump administration have been unable to strike a deal on a new relief package, much of the support Americans received has faded or dried up entirely.

There are more than 40 million student loan borrowers in the United States, and monthly student loan payments are usually somewhere between $200 and $400. Asking borrowers to resume making those payments while many of them are having trouble with other bills will place even greater burdens on families across the country, potentially causing millions of people to default, rack up penalty fees, and face higher interest rates for the foreseeable future. According to a recent survey, 58 percent of borrowers are not confident they will be able to make their student loan payments after the freeze expires.

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More people are employed now than were at the start of the recession, but it’s not exactly a stable job market. The recent spike in positive coronavirus cases will probably force many more businesses to temporarily close again. The Cambridge City Council, for example, is pushing for more aggressive restrictions on indoor dining. And in Michigan, the governor is imposing new restrictions that will close businesses like movie theaters, casinos, and bowling alleys. But even in cities and states that don’t mandate closures, people are less likely to eat at restaurants or patronize brick-and-mortar stores when there’s a spike because of fears of infection, and that could ultimately lead to more unemployment.

That makes it all the more vital to get consumer spending going. And extending the student loan freeze would help. If millions of Americans have an extra several hundred dollars to spare at the end of every month, they can frequent more businesses and buy more goods and services.

If the Trump administration fails to act, it won’t just be a financial shock. Administrative challenges could also rattle the federal student loan system. As Scott Buchanan, the executive director of the Student Loan Servicing Alliance, told Politico, the system “was not designed to start and stop at the same time for 30 million borrowers.” One of the Department of Education’s loan servicers, for example, accidentally blemished 5 million borrowers’ credit reports because of a coding error when the freeze was first implemented by the CARES Act. And if the federal government hastily flips the switch back on, the student loan ombudsman at the Consumer Financial Protection Bureau has warned, administrators would have to do too much too fast, potentially botching their collection system by billing inaccurately or failing to keep people on manageable payment plans. Any plan to resume these payments should allow time for servicers to properly contact borrowers well in advance of lifting the moratorium so that problems can be averted.

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With Congress evidently out of the picture, millions of Americans are depending on the Trump administration to make the right decision and extend the student loan payment moratorium. Betsy DeVos, the secretary of education, should know by now that her department is probably unprepared to resume collecting these payments. She should urge the president to push the deadline.

And as Trump comes to grips with the end of his presidency, he might double down on the good deed of delaying debt payments and help American families on his way out — if not out of any sense of compassion, then at least to ameliorate his legacy. By extending the freeze by just 20 more days until his term ends, he could easily save millions of borrowers from having to choose between groceries or making student loan payments. That could be one of his final acts as president, or he can continue to sow chaos that will ultimately leave people sicker, poorer, and hungrier. The choice — and the responsibility — is his.

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Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.