Student loan companies are also not ready to resume payments.




Two Massachusetts Democrats are urging Joe Biden to postpone the federal pause in student loan payments until at least March next year.

Sensors by Elizabeth Warren and Ed Markey. Jessica Rinaldi / The Boston Globe

Defenders say that overwhelming majority student loan borrowers are not ready to resume payments this October when the COVID-19 pandemic federal hiatus on student loan payments, interest and fees will expire.

The student loan companies are not ready either, Senators Elizabeth Warren and Ed Markey said.

IN letter tuesday For President Joe Biden, two Massachusetts senators urged their fellow Democrat to extend the hiatus until at least March 31, 2022, citing responses they received from federal student loan service executives stating that companies were not prepared to simultaneously renew payments on about 30 million borrowers.

“As the economy emerges from this unprecedented crisis, borrowers should not face administrative and financial disaster as they begin to recover,” Warren and Markie Biden wrote.

“We urge you to extend the pause in interest payments and student loan payments to allow time to begin repairing the broken student loan system,” they added.

Senators 56 pages of reviews released from student loan companies such as Nelnet and Navient, recognizing that borrowers will need help “navigating myriad complex repayment options” to avoid default.

While virtually all companies said they are gearing up to see a possible renewal of payments go smoothly this fall, some acknowledged that there are concerns about adequate outreach to borrowers and customer support staff.

Since the hiatus began in March 2020, the Department of Education has instructed companies not to contact borrowers about their loans, and some have said they are awaiting further guidance before doing so. Five of the seven companies said they are working on hiring additional employees ahead of the October 1 date.

“Time is moving quickly with less than three months left before the currently announced repayment date, and our concern that we are better prepared to ensure a smooth transition for FSA borrowers continues to grow,” said Stephanie Martella, senior vice President of one of the Warren and Markey was informed about this by the country’s largest student loan service, Pennsylvania Higher Education Assistance.

An additional complication is that PHEAA recently decided not renew the loan servicing contract with the Department of Education, which means that more than 8 million borrowers’ accounts must be transferred to other companies, which, according to Warren and Mark, will take additional time.

In their letter to Biden, the senators noted that the pause in payments saved borrowers $ 72 billion in student loan interest alone.

Borrowers, especially government officials, should not be left with the burden of inappropriate payments while loan servicing workers are working with the Department of Education to make several important transitions at the same time, Warren and Markey wrote, adding that the deadline will be extended until next March. give them “enough time to plan an orderly transition that will support and protect student borrowers.”

Warren and 22 other Democrats continued letter wednesday education secretary Miguel Cardone, who asks what his department is doing to protect borrowers if payments start on schedule, amid fears of a wave of defaults.

However, there is a very real possibility that the pause will be extended after October 1.

Department of Education reportedly Earlier this month, Biden recommended extending the hiatus, although it is unclear for how long. Several service companies wrote in their responses on Tuesday that they acted on the assumption that the maturity date might change again. The Biden administration first extended the pause, which was originally supposed to expire at the end of January this year. on your first day at the office

New pressure from Warren and Mark comes amid their efforts to force Biden to use enforcement action to write off student loan arrears of up to $ 50,000.… The President expressed support for not paying up to $ 10,000 per borrower and asked lawmakers in a narrowly divided Congress to pass legislation.


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