Why 2 top Republicans are “deeply concerned” about restarting student loan payments in 4 months

Senator Richard Burr. Jacquelyn Martin / Associated press

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

  • They said the education ministry did not detail specific plans for the transition of borrowers from three major service providers that have closed.

  • It has “deeply concerned them” that the payment break will be lifted in four months.

  • See more stories on the Insider business page.

When President Joe Biden expanded With the student loan payment hiatus from August to the end of January, his education department has made it clear that this will be the “final extension” for the 43 million borrowers on federal student loans.

Two senior Republicans said the department had not provided enough information on how the transition to reimbursement would be made 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 Education Secretary Miguel Cardona to ask for more information on how he plans to get millions of borrowers back into smooth repayment status. They said that prior to the August extension, Cardona did not respond to their June 2 letter regarding the department’s plan to restart payments and their questions “still remained unanswered.”

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

Lawmakers also expressed concern about borrowers transitioning to new student loan companies after three of them announced they were not considering renewing their federal loan service contracts. the Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite condition management and resources announced that they would shut down their lending departments in June, and just hours after the publication of Tuesday’s letter, Navient – which serves 6 million federal student loan borrowers – announced his plans close too.

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

Insider previously reported that Richard Cordray, the head of the Federal Student Aid Office (FSA), acknowledged the challenges of restarting student loan payments in February. Speaking to the Education Funding Council earlier this month, he noted the “psychological obstacle“borrowers might encounter with the payment restart.

He said that “we can expect that many, many borrowers will not be impatient to return to repayment when they have been led to believe, or even hope, that it will never happen. Overcome this psychological hurdle with millions of Americans can be a lot tougher job than we realize. “

But as some borrowers The problem is more than a psychological one, told Insider – they fear they will no longer have the financial means to make payments again in February.

“Resuming payments makes me very anxious because I somehow have to find that extra $ 200,” borrower noted. “I just don’t have it.”

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