Student loan servicers told not to send billing notices

Paul Bradbury | Pictures Ojo | Getty Images

Federal Student Loans Services has been told not to send payment reminders to borrowers, according to two sources familiar with the matter.

The development suggests the Biden administration may consider extending the pandemic-era payment pause on federal student loans again. The policy, which has been in place since March 2020, allows people to waive student debt payments without accruing interest.

Almost all borrowers have taken advantage of the relief opportunity.

Learn more about personal finance:
10.5% Social Security cost of living adjustment planned for 2023
Only 1% Of People Got A Perfect Score On This Social Security Quiz
Why tax increases may be a sticking point in Social Security reform

Payments are expected to resume after August 31, but the pause could be extended until 2023, sources say.

A spokesperson for the US Department of Education said it continues to assess the impact of the coronavirus pandemic and the economy on student borrowers. The Education Department will communicate directly with loan holders about the end of the payment pause when a decision is made, they added.

More than 40 million Americans are in college debt, owing a total of $1.7 trillion, a balance that far exceeds credit card or car debt. A quarter – or more than 10 million people – were overdue or defaulted on this debt before the pandemic. These grim numbers have led to comparisons to the 2008 mortgage crisis.

The Biden administration is currently deciding how to proceed with student loan cancellation, and it may make its announcement on debt cancellation at the same time as the payment pause extension, according to reports. sources.

Forgoing billions of dollars in debt could take time, and starting bills again before the relief process is complete would likely be a mess for lenders and borrowers.

More recently, the White House reportedly waned $10,000 in student debt for most borrowers, but it’s come under increasing pressure to go further. Politicians such as Senate Majority Leader Chuck Schumer, DN.Y., and groups such as the NAACP have repeatedly pushed the president to wipe out at least $50,000 for all.

Wisdom Cole, national director of the NAACP’s youth and college division, said turning down just $10,000 would be “a slap in the face” for black borrowers, who often have to borrow more than their white peers because of the wealth gap. racial.

Yet the sweeping cancellation of student loans will also likely anger many Americans, including those who have never borrowed for education or gone to college. Some Republicans have said they will try to block President Biden’s efforts to cancel the debt. Rep. Kevin Brady, R-Texas, a high-ranking member of the House Ways and Means Committee, recently called student loan forgiveness “a gift for highly qualified college graduates.”

Overall, however, the majority of voters (62%) support canceling student loans, according to a poll by Morning Consult.

Source link