Senators reiterate call for Biden to extend pause on student loan payments
Washington (July 13, 2021) – U.S. Senators Edward J. Markey (D-Mass.) And Elizabeth Warren (D-Mass.) Sent a letter to President Biden sharing the results of lawmakers’ investigation into federal loan services preparations for resumption student loan repayments and reiterating the call for President Biden to extend the current pandemic-induced pause on payments and interest until at least March 31, 2022.
“As the economy recovers from this unprecedented crisis, borrowers should not be faced with administrative and financial disaster as they begin to recover. We urge you to extend the pause on interest and student loan payments to allow time to start mending the broken student loan system ”, lawmakers wrote.
Last month, lawmakers sent letters to CEOs of all federal student loan departments asking for information on measures companies are taking to put an estimated 30 million federal student loan borrowers back into repayments once the break is over. student loan payments and interest ended in October 2021 Responses received by senators – and released today with the letter to President Biden – indicate that neither student loan borrowers nor student loan managers are ready to resume payments, and managers will need more time to ensure they have people and procedures. in place to provide borrowers with the support they will need.
A service agent summed up the concerns, noting that “time is passing quickly, and with less than three months until the restart date currently shown from the repayment date, our concerns about being better prepared to transition. smooth for FSA borrowers continue to grow “.
Responses from repairers revealed that:
- The payment break brought significant relief to borrowers. According to data provided by five loan officers, nearly 2.5 million student loans were fully repaid during the payment break, suggesting that borrowers took advantage of the current zero percent interest rate to repay the loan. principal balance owed on their loans. Other borrowers have been able to benefit from a discount under the civil service loan forgiveness program and have enrolled in income-tested repayment plans.
- Most borrowers have had very little contact with their federal loan officer during the pandemic payment break. Only one student loan manager provided information indicating that he had conducted extensive and ongoing outreach activities to discuss affordable repayment options, including helping borrowers through the complex and tedious enrollment process for the plans. income-oriented repayment schemes. None of the other officers reported similar levels of awareness to support distressed borrowers, and officers said they were awaiting further advice from the Department of Education’s Federal Student Aid (FSA) office. before you can fully start awareness raising and communication with borrowers.
- Service officers will need more time to ensure there is sufficient staff to support borrowers.Five loan officers said they plan to hire additional customer service staff to help borrowers transition to repayment. The process of recruiting, hiring, training and supervising additional staff can take three to four months, and the expected resumption of payments is only expected in 11 weeks.
- The transition of borrowers from PHEAA to new services will take more time to ensure borrowers are not harmed. PHEAA’s recent announcement that it will not seek an extension of its federal loan service contract creates additional complexity for borrowers. The process of transferring borrower accounts managed by PHEAA to another provider introduces new possibilities for errors, which could exacerbate existing inaccuracies, preventing deserving officials from qualifying for loan forgiveness.