April 4, 2022
By: Freedom to Prosper Team
Student loan borrowers and lawmakers have been awaiting news on whether or not student loan repayments will resume this May. Although we have yet to hear anything official from the White House, experts surmise that federal student loan repayments will be extended once again.
In March, the Department of Education instructed companies that service federal loans not to contact borrowers about their payments resuming in May. While the Department’s notice to companies did not explicitly confirm or deny if the repayments will resume or not, the Department of Education is required to communicate with borrowers at least six times before their loan obligations resume. Democratic congressional aides believe that this is the administration’s way of hinting that another extension is imminent.
Another good sign: President Biden’s chief of staff shared that Biden is contemplating canceling some student loan debt before the moratorium ends or even extending the pause. Longtime advocates of student debt cancellation contend that these extensions are a crucial step in bringing about a permanent solution to America’s student debt crisis.
Senator Patty Murray argues that an extension would allow time for crucial changes to be made. For instance, she explains that the time could be used to put borrowers who were in default back in good standing, cap monthly obligations, and strengthen the Public Service Loan Forgiveness (PSLF) program. A Senate aide noted that many other issues need recourse before the May cutoff. In 2021, three companies that serviced federal loans stopped doing so and their borrowers’ balances were transferred to new companies. This transition gave rise to many mistakes. An expert at the Student Borrower Protection Center explains that resuming the payments for 35 million Americans will surely produce even more mishaps and chaos.
Clearly, there are many reasons for extending the moratorium. Hopefully, borrowers will continue to benefit from some relief.
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