President Biden is set to allow payments on student loans to resume, just as expanded child tax credits end, potentially putting millions of Americans in a financial bind just as COVID-19 cases are rising.
Democrats passed the expanded child tax credit as part of their pandemic relief bill in March, resulting in a $300 monthly payment per child to most families. The last of those payments went out earlier this month, and while the White House had been planning to extend the credits through its Build Back Better legislation, that bill has stalled in the Senate.
According to studies from Columbia University and the left-leaning think tank Center for Budget and Policy Priorities, the expanded tax credit cut childhood poverty in the country by at least 40 percent. A November poll from Yahoo News and YouGov found 49 percent support for extending the credit for an additional year, with 31 percent in opposition.
Meanwhile, a pause on student loan repayment initially put into place under former President Donald Trump and twice extended by Biden is set to expire on Jan. 31. Tens of millions of Americans would then have to grapple with student loan payments averaging about $400 per month.
If the tax credits are not renewed while loan payments are resumed, many families will see their monthly budgets affected, just as COVID-19 cases, hospitalizations and deaths rise across the country, powered by the Delta and Omicron variants.
Prominent Democrats have called on Biden to extend the pause on student loan payments. In a letter to the White House last week, Senate Majority Leader Chuck Schumer, D-N.Y., Sen. Elizabeth Warren, D-Mass., and Rep. Ayanna Pressley, D-Mass., estimated that a resumption of payments would cost approximately 18 million American families more than $85 billion in 2022.
“In order to prevent the student debt crisis from dragging down on our economic recovery, undermining the effectiveness of the American Rescue Plan, and causing unnecessary pain and stress for American families, we strongly urge you to extend the pause on student loan payments and interest and act to cancel student debt,” the three legislators wrote.
White House press secretary Jen Psaki was asked last week whether Biden would consider extending the moratorium, responding, "We're still assessing the impact of the Omicron variant, but a smooth transition back into repayment is a high priority for the administration.”
"In the coming weeks, we will release more details about our plan and will engage directly with student loan borrowers to ensure that they have the resources they need and are in the appropriate repayment plan," Psaki added.
While Schumer had hoped to pass the Build Back Better deal by Christmas, Democratic leaders have been unable to come to an agreement with Sen. Joe Manchin, D-W.Va., over the final details, ranging from the total size of the legislation to how it will be funded. In order to pass the legislation through the budget reconciliation process, all 50 senators in the Democratic caucus must agree on the bill.
While it’s possible Senate Democrats will come to an agreement in early 2022, there is no guarantee that even a pared-down bill would be able to pass.
The faltering budget deal led some Democrats this week to say their focus was now on voting rights legislation, and Biden said Wednesday that there was “nothing domestically more important than voting rights.” The family of Martin Luther King, Jr. has said they will not celebrate the holiday honoring the slain civil rights icon next month unless a voting rights package has passed.
However, in order for voting rights to pass, Democrats would either need to get 10 Republican votes, which is unlikely, or find a way around the legislative filibuster, such as a “carve-out” for bills related to voting.
Democrats had floated the idea of a special carve-out specifically for voting rights that would allow them to pass the package without permanently removing the filibuster, but Sen. Kyrsten Sinema, D-Ariz., said Thursday she was not in favor of such a move, essentially killing the plan.
The party recently used a similar carve-out maneuver to pass an increase of the debt ceiling, frustrating many — including Sen. Raphael Warnock, D-Ga. — that the tactic couldn’t be used again for an issue they view as more important.
“We think it’s so important that we change the rule in order to save the economy,” Warnock told NBC News this week. “Well, the warning lights on our democracy are blinking right now, and we seem unwilling to respond with the same urgency to protect the democracy that we have to protect the economy.”