BUSINESS NEWS

Student-Loan Borrowers Risk ‘Reckless Return to Repayment,’ Orgs Say


  • Over 200 organizations are urging President Biden to extend the student-loan payment pause.
  • They wrote the pause should be extended until Biden fulfills his promises of debt cancellation.
  • Payments resume in less than 2 months, and many borrowers say they are not ready.

With the pause on student-loan payments set to end in 55 days while COVID-19 is ongoing, many lawmakers, advocates, and borrowers have a message for President Joe Biden: extend the pause.

The Student Borrower Protection Center led over 200 organizations, including the American Civil Liberties Union (ACLU), in sending a letter to Biden on Wednesday urging him to “put a stop to this crisis in the making before it begins and extend the current pause on student loan payments.”

“It is clear that payments should not resume until your administration has fully delivered on the promises you made to student loan borrowers to fix the broken student loan system and cancel federal student debt,” the organizations added.

The letter pointed out how, according to Education Department data, the 0% interest rate during the payment pause saved borrowers $5 billion each month, and even though payments will have been on pause for nearly two years come February, both borrowers and the student-loan industry will not be ready to transition back into repayment.

For example, although the Education Department has taken steps during the pandemic to fix broken student-loan forgiveness programs, like Public Service Loan Forgiveness for people in professions like teacher, firefighters, or non-profit work, many of those borrowers are still waiting for relief due to processing backlogs.

And although the CARES Act prohibited wage garnishment for student-loan borrowers behind on payments, Insider previously reported that wages were still being illegally garnished and some of those impacted borrowers have yet to receive relief.

Given these ongoing challenges, “the prospect of a hasty and reckless return to repayment should be cause for alarm,” the organizations said.

Biden campaigned not only on fixing loan forgiveness programs — he also promised to approve $10,000 in student-debt cancellation for every borrower. While he has canceled about $11.5 billion in student debt for targeted groups of borrowers, like those defrauded by for-profit schools, which is authority provided within the law, he has yet to take executive action on broad loan forgiveness.

Senate Majority Leader Chuck Schumer also recently called for Biden to extend the payment pause, citing new uncertainty with the Omicron variant.

“If we don’t extend the pause, interest rates just pile up. Students owe a fortune,” Schumer said. “And with omicron here, we’re not getting out of this as quickly as we’d like.”

“We want the country to ultimately cancel student debt, but in the meantime, extend the pause,” he added. “The pause must prevail.”



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