April 24, 2024

‘Singular Mistake’ to Resume Student Loan Payments Without Relief: Advocates

  • Student loan payments are set to resume in October without broad debt relief.
  • Nearly 200 organizations have asked Biden to deliver relief before payments resume.
  • Biden has begun the process of re-enacting debt relief, but it could take months.

Student loan borrowers are getting closer and closer to resuming payments without the broad debt relief they were promised. Almost 200 organizations don’t want to see that.

On Wednesday, 179 advocacy groups and unions—including the Student Loan Defense Center, AFL-CIO, and NAACP—sent a notice letter for President Joe Biden urging him to provide student debt relief to millions of borrowers before they have to repay.

The Supreme Court struck down Biden’s sweeping plan to cancel up to $20,000 in student debt for federal borrowers at the end of June, and shortly after the decision, the Department of Education announced that they would be pursuing a new path to debt cancel a student using Higher Education. Act of 1965. That way requires the administration to go through the rulemaking process, which could take months due to public hearings and negotiations. But payments are scheduled to resume in October, and the advocacy groups don’t want borrowers to pay another bill without any relief.

“Even more urgent is the recently signed Fiscal Responsibility Act that suspends the debt ceiling until 2025 while codifying the end of the student loan moratorium – a critical economic lifeline for millions – to act now to address the debt of cancel a student before payments resume,” the groups said in the letter.

“While the Administration has announced significant steps to mitigate the most difficult economic consequences for borrowers—including protecting borrowers from negative credit reporting, delinquencies and defaults if they fall behind—the broken student loan system essentially restarting without first delivering the promised relief to borrowers. grave mistake, and will only worsen already difficult economic situations for millions of American families,” they continued.

The groups were referring to Biden’s announcement that he would implement a 12-month “on-ramp” period once payments begin, which would protect borrowers from negative credit reporting if they miss any payments. However, interest would still accrue during that time, so borrowers’ balances would still grow—and even more so without any broad debt relief.

The Biden administration has repeatedly said it would work to move through the rulemaking process as quickly as possible, but at this point, the process won’t be completed before payments resume in October because the rules negotiation timeline.

“We want to help borrowers let down by the basic federal student loan market — that investments in yourself and your education will help you lead a better life,” said Deputy Education Secretary James Kvaal during public hearing on Tuesday. “For those who have seen their debts get out of hand, even while making the payments we ask of them. We will help as many borrowers as possible, and we will work as quickly as possible under the law.”

Still, Republican lawmakers are opposed to any additional relief. In addition to planning to implement a new income-driven repayment plan, the Department announced debt relief last week for more than 800,000 borrowers through a one-time account adjustment for IDR plans. Top Republican on the House education committee Virginia Foxx said in a statement that “Biden’s blatant political attempt to circumvent the Supreme Court is disgraceful. The Biden administration is trampling on the rule of law, hurting borrowers, and abusing taxpayers to pursue headlines.”

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