Democrats call on education department to help borrowers defaulted on student loan


  • 23 Democrats asked the Department of Education how it would protect the wages of borrowers after the resumption of student loan payments.
  • They pointed out that almost half of borrowers with outstanding loans cannot return to good creditworthiness.
  • Democrats worry that borrowers will not be able to get their money back in October without long-term help.
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Even if the pause in student loan repayments does indeed extend beyond October, it will only be temporary. Legislators want to make sure the Department of Education has long-term borrower protection plans.

Senator Elizabeth Warren of Massachusetts, Senator Cory Booker of New Jersey and Rep. Ayanna Pressley of Massachusetts urged 23 of their fellow Democrats to ask the Department of Education for information on practices that “harm student borrowers.” In particular, in their letter For Education Minister Miguel Cardone, lawmakers wanted to know what measures the department is taking to protect the wages and benefits of borrowers when payments are resumed.

“Even before the 2019 coronavirus disease (COVID-19) pandemic, the collection of outstanding student loans was disastrous for defaulting borrowers, who had their wages, tax refunds and even social security checks confiscated, and they were forced to pay exorbitant fees, “wrote the Democrats.

The letter cites report from the Center for American Progress, which found that 45% of borrowers do not default and have not found a way to get their loan back to good creditworthiness, making it difficult to get housing and jobs.

Democrats added that although the CARES Act initially suspended payment of student loans during the pandemic, the Department of Education and Treasury still “improperly allocated and withheld” more than $ 200 million from about 390,000 borrowers during that time.

“The Department’s failure to fully comply with the collection moratorium raises concerns about how it will respond to the upcoming scheduled resumption of collection and payments on October 1, 2021,” the letter said.

The Department of Education also said it would return any wage or tax refunds received since the start of the pandemic, but more than 23,000 borrowers whose wage increases have not yet received reimbursements because the department did not have the correct borrower addresses on file. in accordance with National Consumer Law Center, therefore, Democrats emphasize the importance of proper preparation for the transition to student loan repayment.

Many Democrats who signed this letter are also calling for a suspension of payments. extended at least until next March, given that both borrowers and services have stated that they not prepared resume payments in just a few months.

Legislators wrote: “As we approach the currently scheduled end of the suspension of payments and fees, we are concerned that borrowers will again find themselves in an unacceptable financial situation, causing long-term damage to their credit and financial stability and sudden unnecessary delay. our recovering economy. “

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