The Biden administration is taking early action to deliver clear messages to student loan borrowers. One message is that student loan repayments will resume in February. The other is that the massive student loan cancellation is unlikely to happen.
Last month, the Biden administration extended the suspension of student loan payments and the interest freeze until January 31, 2022. The relief, which began in March 2020, was scheduled to end on September 30 after several previous extensions. by former President Trump and then the President. Biden. The Biden administration has repeatedly called the most recent extension a “final,” meaning millions of borrowers will have to resume paying off their student loans in February 2022.
Meanwhile, student loan borrower advocates and their allies in Congress have continued a long campaign to pressure President Biden to use executive action to enact a blanket student loan cancellation more of $ 50,000 or more per borrower. Biden himself has expressed his opposition to such widespread debt cancellation and his skepticism that he would have the legal authority to pass it.
In remarks last week (as reported by POLITICO) at the Education Funding Council’s (EFC) 2021 Education Funding Conference, Richard Cordray, director of operations for federal aid to students at the U.S. Department of Education, threw cold water on the possibility of mass student loan cancellations, and suggested that discussions of widespread student loan cancellations have left borrowers confused and unwilling to restart payments.
“The [payment] pause was not a single decision that spanned that entire period, but rather a series of extensions that each generated their own set of workflows, ”Cordray said. “FSA has had several periods where it has had to plan and prepare for the return to reimbursement, only to reverse the course, often at the last minute. The dilemma of how to communicate these mixed messages to borrowers has also been serious, with so many false starts undoubtedly creating enormous confusion over what even the immediate future may hold. At the same time, borrowers heard a constant drumbeat about the possibility of a loan forgiveness, either wholesale or piecemeal … or even hope, it was never going to happen. Overcoming this psychological hurdle with millions of Americans can be much more difficult work than we realize. “
The Biden administration has reportedly conducted a formal review of legal authorities that could be used as the basis for a large student loan forgiveness since April. The results of this review have not yet been released. But Cordray’s comments open a window into administration thinking and strongly imply that a decision on massive student loan debt cancellation may already have been made.
But borrowers don’t necessarily run out of options. The Biden administration has already used executive action to write off nearly $ 10 billion in federal student loans this year alone. The administration uses a “targeted” approach to student loan cancellation by expanding existing programs such as borrower advocacy through repayment and the Total Permanent Disability (TPD) discharge program, relaxing their requirements. or by automating student loan relief to eliminate the need for affirmative requests. . These initiatives have translated into measurable benefits for hundreds of thousands of borrowers.
However, the defenders push the administration to go further. Biden is likely to face continued pressure to enact additional debt cancellation and other relief through programs such as the Public Service Loan Forgiveness Program (PSLF), and by expanding and improving pathways. existing relief through better income-based repayment plans. And next month, hearings will begin on overhauling regulations governing key federal student loan cancellation and repayment programs, which could lead to significant structural changes in the federal student loan system.
In the meantime, the ministry has already started sending mass emails to borrowers warning them to “start planning for repayment” in early 2022.
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