Why 2 top Republicans are ‘deeply concerned’ about restarting student loan payments in 4 months

Ayelet Sheffey

Senator Richard Burr. Jacquelyn Martin/Associated Press

  • Representative Virginia Foxx and Senator Richard Burr said they were concerned about the restart of student loan payments in February.

  • They said the Department for Education had not detailed specific plans for the transition of borrowers from three main services that have closed.

  • This left them “deeply concerned” about lifting the payment break in four months.

  • See more stories on Insider’s business page.

When President Joe Biden extended the student loan payment pause from August to the end of January, his Department of Education made it clear that this would be the “final extension” for the 43 million borrowers benefiting from federal student loans.

Two prominent Republicans said the department had not provided enough information on how the transition to reimbursement will be completed in just four months.

On Tuesday, Representative Virginia Foxx and Senator Richard Burr, senior members of the House and Senate Education Committees, sent a letter to Education Secretary Miguel Cardona, requesting additional information on how which he plans to bring millions of borrowers back to smooth repayment. They said that prior to the August extension, Cardona had not responded to their June 2 letter regarding the department’s plan to restart payments, and their questions “still remain unanswered.”

“The lack of clarity and direction on the process surrounding returning borrowers to repayment is as troubling as the process is uncertain,” the Republican lawmakers wrote. “We remain deeply concerned about the Department’s ability to ensure a smooth transition to reimbursement in four months.”

Lawmakers also expressed concern about the transition of borrowers to new student loan companies after three announced they did not plan to renew their federal loan servicing contracts. The Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources announced they would shut down lending services in June, and just hours after Tuesday’s letter was published, Navient – which serves 6 million ‘Federal Student Loan Borrowers – Announced Its Closing Plans Too.

This means the Department of Education will have to administer the transition of almost 16 million borrowers to new student loan companies, and Foxx said the two letters she sent regarding this transition also went unanswered. .

Insider previously reported that Richard Cordray, the head of the federal Office of Student Aid (FSA), acknowledged the challenges of restarting student loan payments in February. When speaking to the Education Finance Council earlier this month, he noted the “psychological hurdle” borrowers could face with payments restarting.

He said that “we can expect that very many borrowers will not be eager to repay when they have been led to believe, or even hope, that it will never happen. Overcoming this psychological hurdle with millions of Americans can be a much more difficult task than we realize.

But, as some borrowers told Insider, the problem is much more than psychological — they fear they won’t have the financial wherewithal to make payments again in February.

“Restarting payments is making me very anxious because somehow I have to find that extra $200 (276 AUD),” said one borrower. “I just don’t have it.”

Comments are closed.