Biden keeps payments freeze, forgiveness stalled

0

WASHINGTON – President Joe Biden’s administration has said it will extend the hiatus on federal student loan payments one last time, until Jan. 31, for a total of nearly two years of reprieve for borrowers.

“This latest extension will give students and borrowers the time they need to plan for the restart and ensure a smooth return to repayment,” Education Secretary Miguel Cardona said in a statement on Friday.

Since the pandemic first struck, millions of student loan borrowers have been spared having to pay into their accounts. The payment freeze was scheduled to expire on September 30. It also included a 0% interest rate on loans, and the government had ordered lending departments to stop collection attempts.

Collecting the country’s $ 1.6 trillion student loan bills is already a daunting task in normal times. Waiting for borrowers to resume their payments after a hiatus of almost two years will be an even more difficult challenge. Complicating matters further is the departure of two companies that operated government loan programs.

Lawmakers and borrower advocates had said the collision incidents warranted another extension of the federal student loan payment hiatus. The borrowers also wanted more time. In one investigation carried out on behalf of Pew Charitable Trusts, nearly two-thirds of borrowers said it would be difficult to restart payments if the moratorium was lifted at the end of September.

Those with student loan debt have been through this limbo many times. Former President Donald Trump first suspended payments on federal loans at the start of the pandemic in March 2020. At the time, the suspension was only supposed to last two months, but the administration extended it several times. times.

Biden had also extended the break, which is how the federal government reached the end date of September 30.

The nearly two-year freeze will have offered a unique opportunity to borrowers: those who have made payments have done so without interest, allowing them to repay their premium much faster.

Yet millions of Americans – many of whom voted for Biden – were hoping the federal government would forgive their student loans, which reached record levels in 2020. Biden said early in his term he would ask Congress to cancel $ 10,000 per person in debt.

The amount was far less than many progressives had hoped to see. In all cases, discussions on the subject have stalled because Congress is instead focusing on adopting two infrastructure packages.

Additionally, Democrats disagree on who should authorize the pardon in the first place.

Student loan relief is not included in any of the infrastructure deals, as Democrats say Biden can write off debt through executive action. Biden pushed back, saying he didn’t think he had that authority. At the end of July, the White House told USA TODAY that the administration was still exploring its options.

“While this temporary relief is welcome, it does not go far enough,” said Senate Majority Leader Chuck Schumer, DN.Y., Senator Elizabeth Warren, D-Mass., And Rep. Ayanna Pressley. , D-Mass., In a Friday statement on the payment freeze.

“We continue to call on the administration to use its current executive power to write off $ 50,000 in student debt,” they said. “Canceling student debt is one of the most important actions President Biden can take right now to build a fairer economy and fight racial inequality.”

Since taking office, Biden has written off about $ 1.5 billion in student debt, which has affected about 92,000 borrowers, according to the Education Department. But these loans were all linked to for-profit college fraud victims.

For-profit college closed, disrupting the life of a veterinarian:Two years later, it is still in the process of rebuilding itself.

Borrowers who feel unprepared to repay their loans starting in February may be able to save more time by requesting a deferral. Additionally, the federal government offers a variety of plans that tie borrowers’ monthly payments to their income.

Contribution: Savannah Behrmann


Source link

Leave A Reply

Your email address will not be published.