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Millions of federalstudent loanborrowers are again being granted a payment pause.
“If loan payments were to resume on schedule in May, analysis of recent data from the Federal Reserve suggests that millions of student loan borrowers would face significant economic hardship, and delinquencies and defaults could threaten Americans' financial stability,” Biden said in the statement.
The move will grant more breathing room for 41 million borrowers, 35 million of which have not been making payments, according to Federal Reserve data. The White House said that as part of the transition, the Department of Education will also offer additional flexibility and support for borrowers.
Biden previously extended the payment freeze when he assumed office in January 2021 and again in August 2021, with plans to resume in early 2022. But in December, the White House once again added a three-month extension due to borrowers' projected financial hardship.
Democratic legislators including Sen. Elizabeth Warren, Senate Majority Leader Chuck Schumer and House Majority Leader Jim Clyburnreleased a letterin January thanking Biden for the pause but requesting that the president cancel up to $50,000 of federal student loan debt for each borrower outright.
“Canceling $50,000 of student debt would give 36 million Americans permanent relief and aid the millions more who will eventually resume payments their best chance at thriving in our recovering economy,” the lawmakers wrote. “In light of high COVID-19 case counts and corresponding economic disruptions, restarting student loan payments without this broad cancellation would be disastrous for millions of borrowers and their families.”
According to a report cited in the letter, 89 percent of borrowers who were employed full-time expected to experience financial insecurity if payments resumed.
Federal student loan debt tallied roughly $1.6 trillionat the end of 2021. That’s the second largest consumer debt category, surpassing money owed on cars or credit cards, according to theForbes.
Biden, however, is asking borrowers to expect to return to regular payments eventually.
source: people.com
