A student loan servicing trade organization expressed concerns that the Biden administration’s lack of clarity on the resumption of student loan payments is creating a “precarious position.”
In a letter to Education Secretary Miguel Cardona, the Student Loan Servicing Alliance said Monday that the administration’s failure to provide clear direction on the resumption of student loan payments, currently scheduled for Sept. 1, was creating substantial difficulties for student loan servicers.
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“The Administration’s ongoing uncertainty about resumption of repayment on federally-held student loans puts the federal student loan program and your borrowers in an increasingly precarious position,” the letter read. “You should be aware that any announcement at this late date, less than ten days before the scheduled resumption of September 1, risks operational disruptions.”
The SLSA explained that loan servicers had held off on informing borrowers of the impending resumption of loan payments at the request of the administration, but had been given no clear directive on what the administration had planned. Meanwhile, servicers are operating under the assumption that payments will resume on Sept. 1, potentially requiring money from millions of borrowers unprepared to resume making payments.
“If repayment does begin on September 1, as current directive requires, then you also should be aware that millions of borrowers will be confused, some caught massively off guard, some may go delinquent unnecessarily, and it may take months to resolve those issues — as a result of [Federal Student Aid] guidance to cease communication about the resumption to those borrowers,” the SLSA said.
The Biden administration has promised an announcement on the status of student loans as early as this week, with speculation mounting that the administration is moving to discharge $10,000 in student loans per borrower with an income below $125,000 a year. Payments have been paused since the early days of the pandemic in March 2020, which has been extended multiple times, most recently in April.
In a statement to the Washington Examiner, Rep. Virginia Foxx (R-NC), the House Committee on Education and Labor’s ranking member, said the Biden administration is “continuing to play politics at the expense of taxpayers and borrowers.”
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“Millions of borrowers are already in the dark about their resumption of payments, and by the day, their confusion increases. If you’re looking for sheer and utter incompetence, this administration is serving it up piping hot every day,” the congresswoman said.
