“Very soon” there will be a decision to extend the moratorium on student loan

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As millions of student loan borrowers approach the end of the current pause in student loan payments, the Biden administration has provided little detail on whether the moratorium could be extended further. But administration officials suggested additional information would be provided shortly.

At a press conference on Thursday, Education Minister Miguel Cardona was asked when borrowers will finally receive clear information from the Biden administration on whether they really need to plan to resume repayment after the student loan moratorium ends Sept.30. soon, ”said Cardona’s secretary. “Today I have no information. But this is a priority for us. Borrowers need information and they need help as well. ”

The current pause in most federal student loans has not only suspended the payment of obligations to millions of borrowers; he also cut interest rates to zero and froze all efforts to collect student loans. The moratorium began in March 2020 and was extended several times by former President Trump and President Biden. The latest extension of incentives ends on September 30, which means that by October, millions of borrowers will receive an invoice for the first time in 18 months. The sudden resumption of payments and collection activities for more than 30 million student loan borrowers has never happened before, and their advocates are increasingly worried about the ability of student loan servants to cope with the sudden shift.

To complicate matters further, the recent announcement of two large student loan servicing companies – FedLoan Servicing and Granite State Management & Resources – that they will not renew their contracts with the Ministry of Educationby effectively ending its role in servicing student loans for the federal government. Consequently, millions of student loan borrowers’ accounts will have to be transferred to new loan service providers, just like the accounts are returned to repayment again. The details of these transfers were not disclosed, and it is unclear if the Department has a specific plan for transferring borrower accounts to new lending institutions. However, the Department has recently started notifying borrowers prepare.

Student loan borrower attorneys and legislators in Congress increasingly sound the alarm about a coincidence, warning that neither the government and its contractors nor the millions of student loan borrowers are ready. “The combination of repayment resumptions, together with the risks of large-scale loan transfers by service organizations for a long time unable to properly service federal student loan borrowers, would be disastrous if effective consumer protection measures are not taken,” warned Persis Y, Project Director helping student borrowers at the National Consumer Law Center, speaking before Congress last month.

A coalition of dozens of human rights organizations wrote to the Biden administration earlier this year. “The pause in student loan repayments was one of the most important investments the federal government has made in American financial lives in a generation — recognizing that the shortcomings of the current student loan protection system cannot protect families in the face of the economic crisis. and the public health crisis, ”wrote the coalition representatives. “There is a broad consensus among borrowers, lawyers, industry representatives, regulators, law enforcement officials and legislators that a hasty resumption of student loan payments is a recipe for disaster and will lead to widespread confusion and disaster for student loan borrowers.”

The survey shows that borrowers are not ready to resume payments. BUT interview A study by Student Debt Debt Crisis and Savi earlier this year found that 90% of student loan borrowers are not ready to start repaying their loans again this fall, and almost two out of three respondents said they did not believe they would be willing to resume payments. until at least September 2022.

The Biden administration has repeatedly assumed that in the near future, borrowers will receive information about a possible further extension. In May, Secretary of State Cardona said the administration “looking at»Possibility of further extension. In June, Cardona’s secretary said“The extension of the pause is what we already talked about … We do plan on getting the information to broadcast soon.” With only 56 days left until the moratorium expires, there is not much time left to avoid discontinuing student loan payments.

Further reading

Student Loan Mess Coming: Borrowers, Do These 6 Things By September

Huge shake-up in student loan service: this major loan service center ends its contract

Has the Biden administration just sent a big signal to cancel the student loan?

Student Loan Cancellation Debate Continues Due to Service Disruptions



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