What Does The End Of The Covid-19 State Of Emergency Mean For Student Loans? 

The White House announced on January 30, 2023 that it plans to end the Covid-19 national emergency declaration on May 11, 2023.

This announcement has several potential consequences for student loans – including the existing student loan payment pause, as well as potential implications for Biden’s student loan forgiveness plan.

This potential end of the Covid-19 state of emergency could have side-effects that impact student loan borrowers. Here’s what to know.

Student Loan Payment Pause

Since March 13, 2020, the repayment obligation for federal student loans has been suspended. Interest on loans eligible for the payment pause has been waived. Section 3513 of the CARES Act (P.L. 116-136) provided for the payment pause and interest waiver to run through September 30, 2020.

Since then, the Trump and Biden administrations have relied on the Heroes Act of 2003 (P.L. 108-76) to extend the payment pause and interest waiver further. 

Biden’s Student Loan Forgiveness Plan

On August 24, 2022, President Biden announced a plan to provide up to $20,000 in student loan forgiveness to borrowers who previously received a Federal Pell Grant and up to $10,000 in student loan forgiveness to non-recipients. Eligible borrowers must have income under $125,000 if single and $250,000 if married. 

Six lawsuits challenged the President’s plan, seeking to block it. Several lawsuits were dismissed for a lack of legal standing, but two were not. The Biden Administration has appealed these cases (Biden v. Nebraska and Department of Education v. Brown) to the U.S. Supreme Court, which has scheduled hearings for February 28, 2023. 

On November 22, 2022, the U.S. Department of Education announced that repayment will restart and the payment pause and interest waiver will end 60 days after the court cases are resolved.

The End Of The State Of Emergency

The end of the national emergency declaration on May 11, 2023, may interfere with both the payment pause and interest waiver and the President’s student loan forgiveness plan.

The legal authority for the payment pause and interest waiver is based on the Heroes Act of 2003. The Biden Administration has asserted that the Heroes Act of 2003 also provides it with the legal authority to implement the President’s student loan forgiveness plan.

But the waiver authority under the Heroes Act of 2003 is effective only “in connection with a war or other military operation or national emergency.” [20 USC 1098bb(a)(1)] The Heroes Act of 2003 defines the term “national emergency” as a national emergency declared by the President. [20 USC 1098ee(4)]

Thus, the legal authority to provide the payment pause and interest waiver ends when the national emergency declaration ends. Likewise, if the Biden Administration prevails in the U.S. Supreme Court case, their legal authority to implement the President’s student loan forgiveness plan will end when the national emergency declaration ends.

Supreme Court Case

The U.S. Supreme Court could issue a ruling soon after the February 28, 2023 hearings. But, the U.S. Supreme Court could wait until the end of its term before issuing a ruling. The U.S. Supreme Court’s term ends on the Sunday before the first Monday in October, but the court is in recess starting in late June or early July. So, it is possible that the U.S. Supreme Court will wait until the end of June to issue a ruling in this case. 

It seems odd that President Biden will end the national emergency declaration on May 11, 2023, when the President might still need to rely on the national emergency declaration to implement the payment pause and interest waiver and the President’s student loan forgiveness plan.

However, it is possible that the Biden Administration is interpreting the Heroes Act of 2003 language “in connection with” as not requiring the national emergency declaration to still be in effect. 

If the Biden Administration loses the U.S. Supreme Court cases, ending the national emergency declaration on May 11, 2023 will preclude the Biden Administration from adopting a Plan B of extending the payment pause and interest waiver indefinitely. 

However, the White House statement of administration policy says, “At present, the Administration’s plan is to extend the emergency declarations to May 11, and then end both emergencies on that date.” Like other “final” announcements related to student loans, it is possible that the Administration’s plan to end the national emergency declaration on May 11, 2023 will change.