Students Are Refusing to Pay Back Their Loans When Payment Pause Ends

Some college graduates are suggesting there should be a general boycott on repaying student loans, once the current federal loan payment pause ends in the summer.

The debt ceiling deal agreed between President Biden and Speaker Kevin McCarthy says the pause, initially introduced as a temporary measure during the coronavirus pandemic, will "cease to be effective" from 60 days after June 30.

Student loans have emerged as a highly charged political issue in recent years. On Thursday the Senate backed a House resolution that would cancel Biden's student loan forgiveness plan, which would wipe $10,000 from the debt of most borrowers, and up to $20,000 for graduates who received Pell Grants. The president has pledged to veto this bill, which he described as "an unprecedented attempt to undercut our historic economic recovery." The Supreme Court is expected to rule on Biden's plan in late June or early July.

A pause on student loan repayments was first introduced by the Donald Trump administration in March 2020, as part of its CARES Act which was designed to support graduates through the Covid-19 pandemic. It has since been extended eight times, but any possibility of a ninth extension was ended by the debt ceiling agreement.

Some graduates responded with anger after hearing the pause would be ending, with a number even suggesting a payment boycott on social media.

One Twitter user, from Detroit, wrote: "You know we could all just refuse to pay our student loans lol. If there were mass collective action they wouldn't be able to do s***."

CarrieLynn Reinhard, who teaches communication arts and sciences at Dominican University, wrote: "People should just refuse en masse to pay their student loans back when payment resumes this summer. What will happen? Tank your credit score so no one can afford a home ever? Oh, gee, how horrible... No repayment without equal financial burden across the country."

A third twitter user wrote: "We really should all just refuse to pay our student loans

"It's easier to do nothing if you're already doing nothing."

Another user, from Iowa City, posted: "Goodbye to my good credit score!

"I REFUSE TO BACK PAY STUDENT LOAN INTEREST."

When contacted for comment, a Department of Education official referred Newsweek to a statement made by Secretary of Education Miguel Cardona on May 28, in response to the debt ceiling deal.

He tweeted: "I applaud President Biden for averting a crisis with this deal and for protecting our student debt relief plan in full. The House Republicans' original plan would have made cuts equivalent to about 100k teachers. We still have work to do, but those draconian cuts will not happen.

"Despite Republicans' efforts to end targeted student debt relief and move up our planned end to the payment pause, we will ensure a smooth return to repayment process. The deal also protects our ability to pause student loan payments should that be necessary in future emergencies."

The debt limit deal agreed between Biden and McCarthy was designed to prevent the U.S. from defaulting on its debts in early June. The deal raised the debt ceiling in return for spending restraint.

Under its terms, the limit will be increased beyond $31.4 trillion over the next two years. Spending will remain "roughly flat" during 2024, though there are exceptions for defense and veteran funding, and increase by 1 percent in 2025.

The agreement passed the House on Wednesday, and the Senate on Thursday, despite opposition from some Republicans who wanted more cuts, and some Democrats who thought they went too far. It is expected to be signed into law by Biden imminently.

Update 6/7/23, 4:15 a.m. ET: This article has been updated following contact with the Department of Education.