(WFXR) — The education secretary confirmed this week that the pause on federal student loan payments is set to end this year.
It’s been in place for more than three years and has been extended eight times.
The New Civil Liberties Alliance (NCLA), a nonpartisan, nonprofit civil rights group, filed a Motion for Preliminary Injunction in Mackinac Center for Public Policy v. U.S. Department of Education, Miguel Cardona, and Richard Cordray, in the Eastern District of Michigan.
According to litigation counsel for the NCLA, Sheng Li said the lawsuit urges the U.S. Department of Education to stop, what they call, an unlawful pause on student loan repayments, and the pause on the accrual of monthly interest on that debt.
“Congress suspended monthly payment obligations and interest accrual on federal student loans by law for six months in response to the Covid-19 pandemic. When that pause expired in September 2020, the Department unilaterally extended it without any lawful basis. Congress’s decision to suspend student-loan payments and interest accrual used its exclusive power of the purse. But Congress only authorized six months of debt relief—approximately $30 billion—and did not authorize a penny more in expenditure. So, every additional month’s extension of the pause has unlawfully cancelled debt, in violation of the Constitution’s Appropriations Clause.”The New Civil Liberties Alliance, NCLA
According to the organization, the student-loan pause wipes out $5 billion of U.S. Treasury assets every month, costing taxpayers $160 billion dollars and more.
Li said the pause benefits high-income earners with larger loans, like doctors and lawyers.
“The committee for responsible federal budget found the loan pause for the last three years benefited a recent law school graduate, by about forty thousand dollars,” said Li.
He added it also undermines loan forgiveness programs working to help borrowers.
Radford University political expert, Jennifer Walton, said there are many factors playing into the conversation about student loan repayments, but arguments that Supreme Court Justices heard, surrounded the number of defaults there will be on student loans if the loan forgiveness doesn’t go through, or if they don’t pause the payments again.
“If it’s 10 to 20 thousand dollars, for some people that is not even a dent,” said Walton.
If and when repayments begin, she hopes students will utilize the resources around them.
“Be proactive don’t just sign up for a loan not understanding what will happen once you graduate,” said Walton.
She suggests meeting with a financial counselor, whether you are in school or not.
You can view the full press release by the non-profit organization here.