Why Your Student Loan Payments May Be Delayed (Again)
This story first appeared in NPR’s Education newsletter. Register for early access to exclusive stories like this.
Federal student loan repayments are supposed to resume in May, more than two years after they were halted due to the pandemic. But the U.S. Department of Education recently emailed some unusual advice to companies handling its $1.6 trillion student loan portfolio, casting doubt on that timeline.
Do not contact borrowers about this May 1 deadline, as directed.
The email, obtained by NPR and first reported by Politico, did not explain why the services should be silent on the deadline, nor did it say the deadline would change. But the order suggests the Biden administration is considering another extension of the student loan payment freeze.
The department has a legal obligation to reach out to borrowers at least six times before returning to repayment, thus telling services not to do so, at a time when legally it should happens, means that the administration can only delay this decision for so long.
This email comes just days after White House Chief of Staff Ron Klain hinted that the refund break could be extended in an appearance on the Pod Save America podcast.
“The president is going to look at what we should do on student debt before the break expires, or he’ll extend the break,” Klain said.
The left is pushing to cancel student debt
Klain’s words – “what we should do about student debt” – are a clear reference to the elephant in the room for Biden: He promisedas a presidential candidate to write off at least $10,000 in student debt per borrower, but his reluctance so far to do so has frustrated many in his party.
Biden now faces mounting pressure from his own left flank, with Rep. Ayanna Pressley, D-Mass., tweeted recently“Cancellation of student debt is a matter of racial and economic justice” and “@POTUS must #cancel student debt” – a tweet from Sen. Elizabeth Warren, D-Mass., shareadding “Grateful to be in this fight by your side.”
Even Senate Majority Leader Chuck Schumer made things uncomfortable for Biden. After Klain’s comments became public, Schumer tweeted“Today would be a great day for President Biden and Vice President Harris to #CancelStudentDebt.”
This pressure from his fellow Democrats contributed to Biden’s last-minute decision in December to extend the January 31 reimbursement break to its current slot, May 1, even though the Department of Education had already begun sending notice to borrowers.
In fact, over the past two years, the department has sent nearly 385 million emails to borrowers alone alerting them to approaching deadlines, only to see those deadlines evaporate half a dozen times when the Trump administration then the Biden administration announced another extension. Result: confusion for borrowers.
Now comes this email to lending service companies, which appears to be an effort to prevent another round of confused borrower notices around another deadline that could evaporate.
There are risks in resuming reimbursement in May
There are great logistical and political risks in forcing tens of millions of borrowers to resume repayments in May.
Logistically, two giant student loan servicers, Navient and FedLoan, are ending their federal contracts, leaving the department to transfer millions of borrowers to other servicers. This could make it harder for some to get the help they need to change repayment plans or monthly payments. Not the kind of frustration Democrats want to linger into an election season.
What’s the biggest problem with May, as anyone with a calendar will tell you: it’s dangerously close to the midterm elections in November. Asking borrowers to resume student loan repayments before this election offers little political benefit to Democrats.
Plus, liberal Democrats who pushed for debt cancellation could see a return to repayment as Biden abandons his campaign promise, because it makes no sense to force borrowers — and the government — to resume the repayment and collection of the debt if the cancellation is in progress. . If, on the contrary, Biden extends the deadline, even if he continues to avoid a reversal decision, the pandemic pause becomes an election season asset for Democrats, rather than a liability.
“Joe Biden is the only president in history where no one has paid his student loans during his entire presidency,” Klain said on the podcast, clearly testing a talking point for borrower-voters.
And some borrower advocates who pushed Biden hard for the cancellation are already throwing their support behind another extension of the repayment pause.
“This is one of the rare instances where economics, politics, politics and common sense are all pushing in the same direction,” Mike Pierce, executive director of the Student Borrower Protection Center, said in a statement to NPR. .
“When every other aspect of American life is more expensive as a result of the pandemic, student loans don’t need to be. It looks like President Biden and Vice President Harris recognize that and will step in a once again to protect those in debt,” Pierce said in response to news of the department’s email to loan officers.
Biden’s conservative critics argue enough is enough
When student loan interest and payments were first suspended in March 2020, as part of the Cares Act, borrowers were in the grip of the pandemic, and the pause had bipartisan support. – as are measures to extend it, at least long enough for the economic effects of the pandemic to fade and borrowers to get back on their feet.
Although inflation has hit a new 40-year high, hiring is rebounding. Critics of another extension also point out: The pause on interest and payments has cost the federal government and taxpayers at least $95 billion.
This supposed extension “makes it clear that the president is comfortable using the narrative of an ongoing pandemic to advance [his] political preferences behind closed doors,” Rep. Virginia Foxx of North Carolina said in a statement to NPR. She is the top Republican on the House Education Committee.
“Hard-working taxpayers are tired of having their backs broken by this president. Another repayment freeze only breeds injustice that is inevitably inflicted on responsible taxpayers and borrowers,” Foxx said.
In a statement to NPR, a spokesperson for the Department of Education did not confirm that the reimbursement pause would continue beyond May 1, but wrote, “From day one, the Biden- Harris is committed to providing meaningful relief to student borrowers, including the 41 million borrowers who have saved tens of billions through the extended suspension of student loan repayments.The Department will continue to communicate directly with borrowers at about federal student loan repayment by providing clear and timely updates.
And yet, borrowers who want to know when, exactly, they will have to start repaying their student loans will have to wait a little longer.
NPR is committed to reporting on issues that matter to you and your community, like student loans. Register for the education newsletter to stay up to date and get early access.