Student Loans Update: Democrat Asks Biden to Halt Payments Before Shutdown

Representative Ayanna Pressley, a Massachusetts Democrat, called on President Joe Biden to pause student loan payments if the government shuts down in the coming days.

Congress has until Saturday to reach a deal to pass a series of 12 appropriations bills to fund the government through the next fiscal year to avert a shutdown, which would deliver a wide-ranging impact on millions of Americans. House Republicans remain divided on the bills, with the conference's most conservative members holding out support to receive concessions on social issues and reduced spending. House Speaker Kevin McCarthy must strike an agreement that will simultaneously appease these lawmakers while also passing the Democratic-held Senate in only a matter of days, fueling concerns about the likelihood of a shutdown.

The looming stoppage would begin October 1, meaning it would coincide with student loan payments resuming after being on pause for more than three years due to the COVID-19 pandemic. More than 45 million Americans are set to begin repaying these loans next month as Biden is pressed by progressives to do more to pause or cancel payments as other measures of the economy continue to stagnate.

The shutdown could result in 90 percent of Department of Education workers being furloughed, fueling concerns that loan repayments could be disrupted.

Pressley, who represents Massachusetts' 7th Congressional District including large swaths of Boston and its suburbs, on Wednesday released a statement urging the Biden administration to take action on student loan payments ahead of the shutdown.

"The student loan payment pause has been a lifeline for borrowers across the nation. As we stare down an impeding Republican government shutdown, it is abundantly clear that student loan payments should not resume October 1," Pressley wrote.

She continued, "To throw borrowers back into repayment with bad faith loan servicers and an under-staffed Department of Education is a recipe for disaster and would deeply undermine the progress we have made to advance economic justice for student loan borrowers."

Pressley said the Biden administration should "absolutely pause student loan payments and interest accrual" in light of the likely shutdown.

Newsweek reached out to the White House for comment via email on Wednesday.

White House Press Secretary Karine Jean-Pierre said during a press briefing on Monday that the shutdown could complicate student loan repayments, particularly if the stoppage lasts for a prolonged period, CNBC reported.

"If Republicans in Congress go down this road of shutting down the government, we anticipate that key activities at Federal Student Aid will continue for a couple of weeks," she said. "However, if it is a prolonged shutdown [it] could substantially disrupt the return to repayment effort."

During previous shutdowns, the Education Department put contingency plans in place suggesting that some officials who manage student loan programs will continue to work to support borrowers. Workers who process payments and manage systems to disburse loans were also kept on in that contingency plan.

"Programs with mandatory funding can make obligations and payments during a shutdown. Examples of such programs include Pell Grants and Federal Direct Student Loans," a 2021 department contingency plan read.

The federal government also uses outside contractors for student aid operations, which should theoretically lessen any potential disruptions.