How Will Bidens Executive Orders Affect Your Debt?

Illustration for article titled How Will Bidens Executive Orders Affect Your Debt?

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President Joe Biden signed 17 executive orders on his first day in office, including extensions on eviction moratoriums and student loan payments—moves that will provide temporary relief for millions of Americans currently behind on payments as a result of the pandemic.

Extended eviction and foreclosure moratoriums

The current eviction and foreclosure moratorium was set to expire on Jan. 31. Biden’s Executive Order requested the CDC extend the moratorium through at least March 31, and that request has been enacted (the CDC has the longstanding authority to issue such moratoriums as doing so relates to controlling the spread of communicable diseases).

Biden also requested the Department of Veterans Affairs, the Department of Agriculture, and the Department of Housing and Urban Development extend their moratoriums on foreclosures for federally guaranteed mortgages and deadlines for forbearance requests through the end of March.

In tandem with the extended moratoriums, Biden’s economic plan includes an additional $25 billion in rental assistance for lower-income households affected by the pandemic, beyond the $25 billion in rental assistance available now. Another $5 billion has been earmarked for people struggling to pay overdue utility bills.

According to a U.S. Census Bureau survey, as of last December, more than 10.1 million households in the United States were behind on rent. A different study reveals that people who lost their jobs as a result of the pandemic now owe an average of $5,400 on rent and utilities.

Extended pause on student loans 

The freeze on payments and interest for all federal student loans, first implemented at the start of the pandemic, was expected to expire at the end of the month. The new executive action extends the loan freeze by eight months, to Sept. 30, 2021. Unfortunately, this does not include private student loans, which will have to be dealt with separately by Congress, if they are addressed at all.

David Kamin, incoming deputy director of the National Economic Council, has also stated that Biden would like Congress to cancel $10,000 in debt for all federal student loan borrowers. Other Democrats, like Sen. Elizabeth Warren, have been pushing for cancelling $50,000 in debt for all student loan borrowers via executive order. However, a recent U.S. Department of Education non-binding memo questions the constitutionality of such an action, as spending appropriations are typically the domain of Congress.

According to Investopedia, Americans carry a growing total of nearly $1.57 trillion in student loan debt, with each borrower owing an average balance of $37,584.