Democratic lawmakers ask Biden to extend federal student loan payment hiatus

0


A group of Democratic lawmakers are calling on President Biden to extend the break in federal student loan payments as the country recovers from the pandemic.

In a letter signed by more than 60 members of Congress, lawmakers asked the president to continue the hiatus for at least six months, until the end of March – or whenever employment returns to pre-pandemic levels .

It comes as millions of student loan borrowers will again see bills for their loan repayments, starting in October. Federal student loan interest rates have also been set at 0% for the duration of the pandemic, but those rates will reset to pre-pandemic levels in October. Lawmakers also want interest rates to stay suspended. They noted that the Department of Education has already provided about $ 72 billion in 15-month student loan interest relief alone, and that money could be reinvested in the economy.

“The expected resumption of student loan repayments in October could significantly slow our economic recovery,” lawmakers have warned. “Before the pandemic, the average student loan payment was between $ 200 and $ 299 per month – a substantial part of a household budget and money that is desperately needed for basic needs.”

The Trump administration has initiated the first break in federal student loan payments as the nation’s pandemic crippled the economy. It was then extended for 87% of direct federal loan borrowers through September by Mr. Biden. However, according to the Education Ministry, only about 500,000 direct loan borrowers chose not to suspend payments at the end of March – a fraction of the 18.1 million borrowers a year ago who were still repaying their student loans shortly after the CARES Act came into effect. spent last year.

“President Biden should write off student debt, but in the meantime he should extend the payment break so borrowers don’t get hurt,” said Senator Elizabeth Warren, who, along with Senator Chuck Schumer, and Ayanna Representatives Pressley and Joe Courtney, led the effort.

“Failure to extend this break would not only hurt struggling students in our country, but it could also impact future economic growth and recovery,” Schumer said.

In the letter, lawmakers called on the president to act quickly because borrowers, the education department and loan officers will need time to prepare for any changes to current plans.

Earlier this week, Warren and Senators Ed Markey and Tina Smith also sent a letter to CEOs of all federal student loan departments asking them what steps companies are taking to help roll millions of borrowers back into repayments. this autumn.

Lawmakers noted that borrowers who made automatic payments before the pandemic would see them resume in October, unless they contact their loan service providers in advance. Agents are only required to give three weeks notice before restarting borrowers’ automatic payments.

“This creates a potentially dire situation in which borrowers can have their automatic payments resume with minimal warning, even if their financial situation has changed significantly,” the letter read. “If struggling borrowers are sacked in paying off their student loans without adjustment or support, then they could find themselves in default or in distress, facing dire long-term economic consequences that will reverberate through generations.”

At the same time, a group of Democratic lawmakers are calling on Mr Biden to write off up to $ 50,000 in student loan debt, a move the Biden administration is reviewing to see if it has the legal authority to do so. . To date he has already eliminated $ 1.5 billion of student loan debt for borrowers defrauded by their schools and provided $ 1.3 billion in relief to borrowers due to total and permanent disability.

More than 42 million Americans are in student loan debt, totaling more than $ 1.7 trillion. It is now the second largest amount of consumer debt held by US households behind mortgages.


Leave A Reply

Your email address will not be published.