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FutureStarrA When Will Student Loans Resume
Loan payments, interest accruals and collections of defaulted federal student loans have all been on hold since the start of the pandemic — first thanks to the CARES Act, then due to extensions from former President Donald Trump, former Education Secretary Betsy DeVos and President Biden.
"We don't need to start the student loan system right now," said Mike Pierce, executive director of the Student Borrower Protection Center, an organization that has been urging the President to extend student loan relief. "Nothing about the trajectory of the pandemic and of Omicron suggests that things are immediately better in a way that makes us comfortable sending people student loan bills."
Whenever loan payments resume, many experts say the process will be quite messy, given so many back and forths with borrowers. Even a 2020 report from the Education Department noted the resumption of payments would be messy. Loan servicers and the federal government, the report says, will "face a heavy burden in 'converting' millions of borrowers to active repayment." The transition could also be confusing to borrowers, with some "becoming delinquent, at least initially." (Source: www.npr.org)
Mr. Biden asked borrowers to prepare for payments to resume. In a statement, the Education Department said the pause would provide “additional time to ensure their contact information is up to date and to consider enrolling in electronic debit and income-driven repayment plans to support a smooth transition to repayment.”
You’re more likely to be eligible now. The Biden administration recently made some major changes to the program, which allows a variety of government and nonprofit workers with federal student loan debt to have any remaining balances forgiven, tax-free, after making 120 payments. Now, hundreds of thousands more borrowers may qualify for relief. (Source: www.nytimes.com)