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Senate Majority Leader Chuck Schumer and progressive US Senator Elizabeth Warren warned that the US economic recovery could be hit hard if the Biden administration does not extend the federal government’s pandemic moratorium on student loans in September.
“The resumption of these payments can slow down the recovery of the economy of our country. This could put millions of borrowers on the brink of a financial crisis, ”Schumer said at a press conference in Washington on Tuesday.
Warren similarly said in a subcommittee hearing on Tuesday that “this time bomb in the form of student loans could stall our entire economic recovery when it explodes.” She said that loan servicing companies are not ready to renew payments and do not adequately work with borrowers.
Student loan debt has nearly doubled over the past decade, reaching $ 1.58 trillion in the first quarter, and a payment moratorium has helped people cut other debts like credit card balances, according to the Federal Reserve Bank of New York. The end of the pause can become a brake on a rapid economic recovery.
Senate Democrats, led by New York-based Sumer and Massachusetts-based Warren, are pressuring President Joe Biden’s administration to extend the hiatus until spring and write off up to $ 50,000 in student debt. Warren cited a Pew Charitable Trusts study showing that two-thirds of borrowers said it would be difficult to afford payments if they resume next month.
Some borrowers are unaware that payments are generally renewing, Persis Yu, director of the National Center for Consumer Law’s Student Borrower Project, said at the hearing. Others are unsure of the amount of their payments.
The problem is compounded by the fact that about 10 million borrowers will need to switch to the new lending service in the coming months, as two federal service providers – Granite State Management and Resources and the Pennsylvania Higher Education Aid Agency – will not renew their contracts after the expiration date. their actions. December.
Schumer spoke in the Senate Hall shortly before the press briefing, saying: “With a flick of the pen, President Biden can give a fresh start to tens of millions of borrowers drowning in debt.”
White House spokeswoman Jen Psaki said at a briefing this month that she had nothing to say about the extension of the pay gap and that she would like to give the president “the opportunity to make a decision.”
A story by Peyton Forte and Laura Litvan.
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