The moratorium on federal student loan payments is set to expire later this month, but despite the looming deadline, millions of Americans don’t have guidance on whether those payments will actually resume for the first time in more than two years.
Federal student loan payments for nearly 40 million Americans have been put on hold since the start of the coronavirus pandemic. The interest on those loans has also been fixed at zero percent for the period of the moratorium.
Most recently, the Biden administration in Aprilthrough August 31. At the time, the White House said the president would make a decision on whether to cancel student loan debt before the pause expires or be extended.
Cody Honanian of the Student Debt Crisis Center said, “It is an unexpected error to add more uncertainty to the lives of student loan borrowers at a time where I think the term may define our experience as workers as consumers. Used to be.” ,
Scott Buchanan, executive director of the Student Loan Servicing Alliance, said the Department of Education has asked student loan servicers to halt communications with borrowers so that payments can resume now.
Buchanan on Monday described the lack of updates from the government as “extremely problematic”. With repayments still to resume in September, he said that unless there is a major policy change, the government should have let him reach out to borrowers weeks ago to help with the transition.
When payments were first stopped in 2020 under the CARES Act, borrowers were required to receive six notifications before resuming payments. It is not clear whether this still applies.
On Thursday, more than 100 Democratic lawmakers are urging the administration to extend the student loan payment break. In a letter sent to the President and Education Secretary Miguel Cardona, lawmakers said borrowers are facing a number of economic issues across the country and that administrative action is in process.
In a statement to CBS News, a spokesman for the Department of Education said they would continue to assess the impact ofand will communicate directly with borrowers about the end of the payment pause on the economy and decision making.
Even if the moratorium expires at the end of the month, it does not mean that lakhs of borrowers will have to pay immediately on September 1. Once the pause ends, borrowers will receive their billing statement or other notification at least 21 days in advance. According to the Federal Student Aid Office, the next payment is due.
While the pressure to extend the pause continues, the question remains whether the Biden administration will move to more comprehensively cancel student loan debt. A White House official said Monday that the administration is “continuing to assess cancellation options and no decision has been made.”
Last month, President Biden said he would make a decision on student loans by the end of August. In April, he said there would be an answer on student loan forgiveness “in the next few weeks”. At the time, Biden confirmed that he wasbut in student loan debt Per borrower, which some Democrats have pushed for.
Even considering student loan payment breaks, the Department of Education estimated it saved borrowers $5 billion per month. That’s about $150 billion from the time the pandemic began until the end of August.
While the Biden administration continues to look at comprehensive student loan loan forgiveness, it has already approved more than $26 billion in targeted student loan forgiveness for more than 1.3 million borrowers through executive action, including those found cheating by schools. That includes about $8 billion for those; approximately $9 billion for disabled borrowers; over $8 billion through the Public Service Debt Forgiveness Program; And more than $1 billion for those whose schools closed.