Biden mulling ways to support student loan borrowers when payments resume

The Biden administration is considering ways to ensure borrowers are supported when federal student loan repayments resume in September as Democrats in Congress push for the payment hiatus to be extended and urge President Biden to act unilaterally to keep up to Relieve $ 50,000 of debt per borrower.

The Department of Education suspended payments on federal student loans in March 2020 at the start of the coronavirus pandemic and set interest rates at 0% during the break. Federal borrowers are due to resume their payments on October 1st.

WARREN, SCHUMER PRESSEN BIDEN TO EXTEND THE BREAK DURING THE PAYMENT OF THE FEDERAL STUDENT CREDIT

A Biden administration official told Fox News on Wednesday that the hiatus was meant to help borrowers affected by the pandemic and its economic impact, but noted that the U.S. economy is making and growing every day recovered.

The official added that the administration is still aware of the implications for individual borrowers and families, and said the Department of Education is working to ensure that borrowers who are still suffering from the economic effects of the pandemic are supported when the Payment break on 30.

But dozens of Senate Democrats are calling on President Biden to extend the federal student loan payment moratorium by at least six months.

Last week, 64 lawmakers urged the president to take action before the September 30 deadline, calling for the hiatus to be extended to March 31, 2022 or until the economy returns to pre-crisis levels – whichever is longer.

The effort was supported by Senate Majority Leader Chuck Schumer, DN.Y., and Senator Elizabeth Warren, D-Mass., Along with Rep. Ayanna Pressley, D-Mass., And Joe Courtney, D-Conn.

“The suspension of payments and interest during the pandemic has brought major relief to borrowers and their families during this economic and health crisis,” the letter reads. “However, resuming payments will be a significant challenge for borrowers, loan service providers and the Department of Education, and we urge you not to let the payment pause pass while borrowers are still reliant on this financial relief.

“A wave of student loan defaults would damage the creditworthiness and financial stability of borrowers in the long term and suddenly and unnecessarily burden the recovering economy,” they wrote.

TERMINATION OF STUDENT LOAN DEBTS WOULD NOT BE EFFECTIVE IN GROWING THE ECONOMY, STUDY SHOWS

The Department of Education has provided about $ 72 billion in relief for student loan interest alone, lawmakers said. Around 41 million Americans are benefiting from the federal government’s two-time extended payment hiatus for student loans.

Earlier this month, Education Minister Miguel Cardona said during a testimony in the Senate that the government had made “no announcements” that officials are continuing talks about a possible extension of the payment break.

Schumer and Warren are among the lawmakers who campaigned for Biden to dispose of $ 50,000 in outstanding federal debt per borrower, with Schumer vowing this week that he would “continue to press”.

“With Joe Biden in the White House and Democratic majorities in the House and Senate, now is the time to take action,” Schumer said this week.

However, the White House has claimed that important action regarding loan cancellation needs to be taken by Congress.

An administrative official told Fox News that the president supports Congress, which is providing $ 10,000 debt relief per borrower, and continues to consider what debt relief measures can be administered administratively.

However, the Democrats in Congress have claimed that Biden could use existing executive powers under the Higher Education Act to instruct the Department of Education to “modify, compromise, waive, or release” student loans.

“The Department of Education is working with colleagues from the Department of Justice and the White House to review options regarding debt relief, which is an ongoing process,” an administrator told Fox News.

Outstanding student loan debt has doubled in the past decade, approaching a staggering $ 1.7 trillion. Approximately one in six American adults owes money on student government loans, which represent the largest amount of non-mortgage debt in the United States

Megan Henney of Fox Business contributed to this report.

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