Democratic lawmakers sent a letter to Education Secretary Miguel Cardona this week, asking him to detail the agency’s plan to reduce hardship and confusion as student loan payments are soon scheduled to restart.
Senator Elizabeth Warren (D-Massachusett) led the lawmakers in expressing concern that borrowers might not be informed about the expiration of the payment pause and that borrowers could face fees and other financial distress.
Many borrowers will have to stop paying their loans in order to make ends meet, especially since the economy is reeling due to the pandemics and other global conflicts. Recent polling has found that over a third of borrowers are “not at all confident” in their ability to make student loan payments when the pause ends on May 1. Among those with student debt, 65 percent said that they will have to make “major changes to saving or spending.”
“While we appreciate the Biden Administration’s actions to extend the payment pause amid the COVID-19 pandemic, we are concerned that with less than 70 days until the scheduled expiration, borrowers may lack clarity about the timeline associated with the resumption of payments,” the lawmakers wrote. “Providing this detail is critical to ensure that borrowers are adequately informed about the restart and that borrower harm is minimized during the transition.”
Democrats praisedImplementation by the Biden administration a 90-day grace period for borrowers who miss their first payments after they restart, so that they won’t experience any impact to their credit. According to the Government Accountability office (GAO), about half of federal student loan borrowers are at greater risk of defaulting as payments resume.
Many borrowers might not be aware that payments are being resuming. The Education Department doesn’t have email addresses for about 5.5 million borrowers, and one servicer managing defaulted loans doesn’t have email addresses for about 25 percent of borrowers in default, the Democrats wrote.
There were also problems with student loans being bounced around between servicers while the pause was in effect. Three servicers who managed federal student loans for 12.2 millions borrowers announced last year that they would no more manage them. This may lead to confusion.
The lawmakers ended their letter by asking the Education Department to outline its plan for restarting payments. The agency should provide information about whether borrowers in default will still be in default when payments restart, and if or when borrowers can expect to experience things like wage garnishment if they’re unable to make payments, the lawmakers said.
Student loans have become a flash point for Democrats and debt advocates, who have grown increasingly frustrated with President Joe Biden’s Refusal of fulfilling his campaign promiseStudent loans can be cancelled. Progressives like Rep. Alexandria Ocasio-Cortez (D-New York) Have you been warned? that if Biden doesn’t take action on student loans soon, Democrats could be at serious risk of losing Congress in the midterm elections.
Warren and dozens more Democratic lawmakers have been working for months. They ralliedJohn B. King, former President Barack Obama’s Education Secretary, recently came out in favorof the proposal.
Others who support student loan cancellation include Senator Bernie Sanders (I-Vermont), as well as the Debt CollectiveBiden was urged to cancel all student loan as borrowers drown. $1.9 trillion in debt. Activists are alerted to the imminent end of April’s payment pause are planning a day of action to urge Biden to “pick up the pen” and cancel debt.
However, Congress has asked the Education Department to take more conservative but potentially very impactful steps to help borrowers when their payments resume. In November Warren, SandersCardona was asked by other Democratic senators to move the approximately 8 million borrowers in default on their loans out before payments resume. This would allow borrowers to get a fresh start and could help the economy, the lawmakers wrote.