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According to two sources familiar with the matter, the state’s student loan servicers have been told to hold off on sending payment reminders to borrowers.
The development suggests the Biden administration may consider extending the pandemic-era payment pause on federal student loans again. In effect since March 2020, the policy allows people to waive their student debt payments without accruing interest.
Almost all borrowers have made use of the relief option.
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Payments are scheduled to resume after August 31, but the pause could be extended to 2023, sources say.
A spokesman for the U.S. Department of Education said it will continue to assess the impact of both the coronavirus pandemic and the economy on student loan borrowers. The Ministry of Education will directly notify borrowers of the end of the payment pause when a decision is made, they added.
More than 40 million Americans owe a total of $1.7 trillion in college education debt, a balance that far exceeds outstanding credit card or auto debt. A quarter — or more than 10 million people — were in default or delinquent on that debt before the pandemic. Those bleak numbers have drawn comparisons to the 2008 mortgage crisis.
The Biden administration is currently deciding how to proceed with student loan forgiveness, and it’s possible it could make its debt relief announcement at the same time it extends the payment pause, sources say.
Forgiving billions of dollars in debt could be time-consuming, and resuming bills before the discharge process is complete would likely be a mess for lenders and borrowers alike.
It was recently reported that the White House is poised to forgive $10,000 in student debt on most borrowers, but it is under increasing pressure to go further. Politicians like Senate Majority Leader Chuck Schumer, DN.Y., and groups like the NAACP have repeatedly urged the President to wipe out at least $50,000 for everyone.
Wisdom Cole, national director of the NAACP’s youth and collegiate division, said that merging just $10,000 would be “a slap in the face” to black borrowers, who often have to borrow more than their white counterparts because of the racial wealth gap.
But the widespread forgiveness of student loans is also likely to anger many Americans, including those who never borrowed for their education or went to college. Some Republicans have announced they will seek to block an attempt by President Biden to cancel the debt. Rep. Kevin Brady, R-Texas, senior member of the House Ways and Means Committee, recently called student loan forgiveness a “giveaway to highly educated college grads.”
Overall, however, a majority of voters (62%) support student loan forgiveness, according to a Morning Consult poll.
https://www.cnbc.com/2022/07/26/student-loan-servicers-told-to-hold-off-on-sending-billing-notices-.html Student loan providers have been asked to hold off on sending out invoices