Experts ask Biden to delay student loan repayment

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When the coronavirus pandemic first swept across the United States in March 2020, student debt relief was one of the first policies adopted to help struggling Americans. The CARES Act, passed March 27, 2020, suspended federal student loan payments until September 30, 2020 and temporarily set the federal student loan interest rate at 0%.

Presidents Trump and Biden both extended the moratorium, and payments are currently set to resume on Jan.31, 2022. Lawmakers and experts are now warning that another extension may be needed.

A recent survey of 33,703 student loan borrowers by the Student Debt Crisis Center found that even among student loan borrowers with full-time jobs, 89% say they are not financially secure enough to start. to make payments after February 1. And 21% say they will never be financially secure enough to resume payments.

Today, the Student Borrower Protection Center sent a letter to President Biden alongside 207 other organizations (including the American Civil Liberties Union, the American Federation of Teachers and the NAACP) calling for an extension of the recess.

“In less than 60 days, tens of millions of student loan borrowers are expected to be sacked in repaying federal student loans they are ill-equipped to pay as the deadly Covid-19 pandemic continues to devastate health and Americans’ financial security, “reads the letter.” It is clear that payments should not resume until your administration fully delivers on promises you made to student loan borrowers to fix the student loan system broke and cancel federal student debt. “

The letter echoes a statement released Monday by Senate Majority Leader Chuck Schumer.

“We are still in the pandemic, and borrowers are saving an average of $ 393 per month, which is critical in the midst of Covid,” Schumer said in a statement. “If we don’t extend the hiatus on payments, then this appalling interest will accumulate at a time when too many people are still not financially ready to shoulder a giant monthly bill. Moreover, with the spread of Omicron, the ‘uncertainty as to what will happen next requires at least one more extension of the student loan payment break. “

WASHINGTON, DC – DECEMBER 07: US Senate Majority Leader Chuck Schumer (D-NY) walks away from reporters after speaking with them outside the Senate Chamber of the Capitol on December 07, 2021 in Washington, DC, DC. Schumer informed reporters of an ongoing deal with Republicans in the Senate to pass legislation to lift the debt ceiling.

Anna Moneymaker | Getty Images News | Getty Images

“In all fairness to the [Biden] administration, they postponed it twice, and they said it was the last postponement, “said Randi Weingarten, president of the American Federation of Teachers.” But given the uncertainty in so many lives. of people right now, we would join Senator Schumer in calling for an extension of this moratorium. “

The hiatus brought significant relief to the roughly 45 million Americans who owe federal student loans. Borrower credit scores have risen, and the Department of Education estimates that the policy collectively saved borrowers about $ 4.8 billion per month in accrued interest.

A White House letter to CNBC Make It reiterates the relief the hiatus has brought borrowers.

“As president, I am committed to making the university more affordable and to reducing the burden of tuition fees and student debt for borrowers who need it most,” read the letter. . “That’s why I extended the hiatus on interest and federal student loan payments to give millions of Americans a break as we continue to emerge from the Covid-19 pandemic and rebuild our economy For all. Already, this action has effectively canceled nearly $ 100 billion in US student debt in the form of lost interest payments. “

The letter further states that the Biden administration “also continues to explore other debt relief actions” and reaffirms the president’s willingness to “support legislation that provides for debt relief of $ 10,000 for each borrower “.

While Mike Pierce, executive director of the Student Borrower Protection Center, says blanket student debt forgiveness is needed, he says the hiatus on federal student loan payments has been a critical interim measure.

“The biggest win over student debt was the continuation of the payment break, something Joe Biden did on day one and in the office and continued again over the summer,” said Pierce at CNBC Make It. “Telling tens of millions of people that they don’t have to worry about their student loan repayments is one of the most important anti-poverty initiatives of the Biden administration. And we’ll come back to that as a legacy. because as long as they are able to maintain this financial pressure on student loan borrowers. ”

Pierce warns that student loan managers are not prepared to get all borrowers back into the system at the same time.

“We have heard from borrowers who have waited two or three hours just to get basic questions answered – and it is now when payments are halted,” he says. “When millions of people need to contact their student loan company in order to get an affordable monthly payment or to process paperwork, the system won’t be able to handle it. And the fact that the administration chooses to restart payments all at once for everyone when they just could [extend the pause] seems to be totally incompatible with everyone’s experience with these companies. “

“Looks like it’s set to fail.”

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