In a letter to Biden received by NBC News, a group of Democratic lawmakers asked him to take action by the September 30 withholding deadline, and requested that the pause be extended until March 31, 2022, or until the economy declines. … return to pre-pandemic employment levels, whichever is longer.
The effort is led by Senator Elizabeth Warren of Massachusetts; Senate Majority Leader Chuck Schumer of New York; and representatives Ayanna Pressley from Massachusetts and Joe Courtney from Connecticut.
“The suspension of payments and interest during the pandemic has provided significant relief to borrowers and their families during this economic and public health crisis,” they wrote to Biden.
“However, the resumption of payments is a serious problem for borrowers, lenders and the Department of Education (ED), and we urge you not to suspend payments when borrowers are still dependent on this financial assistance,” the letter said. He speaks.
The letter highlights the pressure Biden is facing to tackle the student debt problem as the September 30 cliff approaches and as public advocates become increasingly disenchanted with a president who they are worried, it does not interest in meaningful interaction with the problem.
The federal student loan moratorium began in March 2020 when Congress passed the CARES Actwhich suspended payments until September 2020 and kept interest rates at 0 percent for an estimated 42 million federal borrowers to reduce the economic impact coronavirus pandemic…
President Donald Trump then took enforcement action extend the deferral of student loan repayment until January, and Biden on his first day in office signed an order continuing to pause until September 30th.
Neither the White House nor the Department of Education said whether the administration is seriously considering extending the tolerance period. In May, Education Minister Miguel Cardona said the extension of the pause was “not ruled out, but now it is September 30th.”
Consumer advocates warned that recovering federal student loan payments after an 18-month hiatus will be a major challenge for the Department of Education and will require significant efforts on the part of the Biden administration to make sure borrowers are aware that payments are being made again. due.
“People need to know when they are going to start making payments,” said Persis Yu, director of the National Consumer Rights Center’s Student Loan Assistance Project. “Payments have been turned off because a lot of people have changed their finances due to the pandemic, so a lot of people don’t even know how much they will pay because their income has changed.”
“We are very concerned about what the plan to include payments will be. I hope this plan will be announced soon, ”she added.
IN The federal reserve It is estimated that Americans owed more than $ 1.7 trillion in student loans in the third quarter of 2020. Research shows that color students more likely to take on student debt and disproportionately difficult to pay off. Highest default rates among students who attended commercial institutions…
In a letter to Biden, Democrats argued that the same people most affected by the economic fallout from the pandemic were women as well as colored people – also account for a disproportionately large share of student borrowers. They warn that the demand to resume payments in October could lead to a “wave of student loan defaults” that could “cause long-term damage to the credit and financial stability of borrowers and could suddenly and unnecessarily slow down a recovering economy.”
The call to extend the credit pause also came as Democrats and debt cancellation supporters pressured Biden to use executive measures to pay off up to $ 50,000 in federal student loan debt for all borrowers.
Chief of Staff of the White House Ron Klein announced on April 1 that Biden had tasked the Department of Education with drafting a memo verifying its legal authority to pay off debt through executive action, stating at the time that he hoped it would take “weeks” on the president’s desk before the memo was released. …
But almost three months after Klein’s comments, it’s unclear when the department’s due diligence will be completed. Neither the White House nor the Department of Education was able to provide a timetable for the review.
In a letter to Biden on Wednesday, Democrats urged the president to complete the due diligence process before resuming federal student loan payments.
“However, given the rapidly approaching deadline for the resumption of payments by borrowers, it is imperative that the administration acts as quickly as possible to extend the pause in payments and interest,” they wrote.