Biden administration extends student loan payment hiatus until January 2022

0

The hiatus on federal student loan payments and collections will continue until Jan.31, 2022, the Biden administration said on Friday.

The move comes after months of growing pressure from advocates for consumers, borrowers and, more recently, key members of President Joe Biden’s own party, including Democratic Senators Chuck Schumer and Elizabeth Warren, who had asked the administration to extend the break at least until March 31, 2022.

“The payment break has been a lifeline that has allowed millions of Americans to focus on their families, health and finances instead of student loans during the national emergency,” the secretary said. ‘Education Miguel Cardona in a press release. “As our country’s economy continues to recover from a deep hole, this latest extension will give students and borrowers the time they need to plan for the restart and ensure a smooth return to repayment.”

The extension announced Friday marks the fourth time the government has extended the student loan payment hiatus – including Biden’s first day in office – which was first put in place in March as a coronavirus relief measure . Whenever the threat of new payments loomed, advocates warned that borrowers were not financially ready and the student loan system was not logistically ready to resume payments for tens of millions. borrowers.

In a press release, the Education Ministry called the January deadline a “final extension” and said providing a final date for resuming payments would allow borrowers and those involved in operating the system. student loan to prepare for the return. of payments.

Over the past few weeks, the prospect of activating the entire student loan system has started to look increasingly difficult. One of the top three student loan managers – the organizations that handle the borrower repayment process – announced last month that he would not accept the renewal of his contract. Another smaller repairman followed suit a few weeks later.

This meant that around 10 million borrowers would switch to a new service around the same time organizations faced a flurry of calls from borrowers who might have questions or would like to adjust their monthly bills as they went. payments resume.

Financial and administrative headaches for borrowers

This could create administrative and financial headaches for borrowers. The pandemic marks the first time the government has shut down the entire student loan system, but in the past when borrowers resumed student loan payments after a more targeted freeze – for example, due to a disaster natural, – new spiked defaults.

It’s a sign borrowers weren’t aware that payments had resumed or struggled to get into an affordable repayment program on time – a scenario advocates feared would repeat itself on a much larger scale when payments will resume after the end of the pandemic era break.

Advocates also called on the Biden administration to use the recess period to address issues plaguing the student loan system, including the barriers borrowers face in accessing civil service loan forgiveness and d ‘other programs that allow borrowers to be paid off their debt under certain circumstances.

Already, the Biden administration has written off more than $ 1.5 billion in debt for borrowers who have been scammed by their schools, but lawyers representing former for-profit students have called on authorities to do more.

The administration is also still facing pressure to pursue some sort of massive student debt cancellation. Despite the pressure and a campaign promise to cancel up to $ 10,000 in student debt as a COVID relief measure, Biden expressed skepticism of the idea.

Still, earlier this year, his administration has requested a note from the Department of Education and the Department of Justice to determine whether Biden has the legal authority to take this action.


Source link

Leave A Reply

Your email address will not be published.