Education Ministry freezes student loan repayments until September
(CBS) – At the behest of President Joe Biden, the Education Department on Thursday extended the nearly one-year hiatus on student loan payments until September, allowing the new administration to begin to hold its Election Pledge to Prioritize and Start Addressing the Over $ 1.5 Trillion Debt Crisis.
Asking the ministry to extend federal student loan forbearance was part of the 17 executive actions Mr Biden signed on the first day of his tenure on Wednesday night. Many, including his action on student debt and an extension of moratoriums on evictions and foreclosures, are aimed at relieving Americans of the economic burden made worse by the coronavirus pandemic.
“Borrowers of all ages often face a difficult trade-off between paying off their student loans, investing in their long-term financial future, or paying their bills,” Biden administration officials wrote in a statement. communicated. “The pandemic has only worsened the economic hardship of millions of Americans with student debt.”
As of March, all federal student loan payments have been suspended within the framework of the federal government COVID-19[female[feminine reply. An extension of the grace period was included in the early drafts of the December stimulus package, but was cut in final negotiations. Prior to Mr. Biden’s executive action, payments were to resume at the end of January.
Student loan debt has been a looming financial problem since before the pandemic, but coronavirus-related job losses and widespread pay cuts, especially among millennials, have exacerbated the problem. Last year, federal student loan debt hit an all-time high, hitting $ 1.6 trillion among more than 40 million Americans, according to the Federal Reserve Bank of New York. On average, student borrowers owe between $ 200 and $ 299 each month, an amount that for many is simply unsustainable; about 1 in 5 borrowers are in default, depending on the US Department of Education.
A Pew Study As of November, nearly 6 in 10 borrowers said it would be “somewhat” or “very difficult” to resume their loan payments the following month.
“Too many Americans struggle to afford basic necessities and provide for their families. They shouldn’t be forced to choose between paying off their student loans and putting food on the table, ”an education ministry official wrote in a statement Thursday announcing the extension of the forbearance agreement.
On the way to the countryside, Mr. Biden promised Voters tackling student debt would be one of his top priorities as president. But exactly how the incoming administration plans to handle the $ 1.6 trillion debt remains unclear. As recently as last week, Mr Biden gave his backing to congressional action to write off $ 10,000 in federal student debt per borrower, but some of his more progressive Democratic colleagues say that is not enough. In the 2020 presidential primaries, Senator Elizabeth Warren of Massachusetts offered to write off up to $ 50,000 in debt and Senator Bernie Sanders of Vermont called for the cancellation of all student loans.
In December, Biden announced Connecticut’s school principal, Miguel Cardona, as his choice for education secretary. If confirmed, Cardona, who spent two decades of his education career as a public school teacher, would offer a direct juxtaposition to former Trump administration education secretary Betsy DeVos, a billionaire champion of school’s choice.
Under DeVos, the Education Department has warned the transition will be chaotic when student loan payments resume. In his 2020 Annual Report, the ministry said it expects loan managers and the federal government to “face a heavy burden in” converting “millions of borrowers into active repayment. Some of these borrowers, the report warns, will become delinquents.
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