Student loan crisis faces upheaval — and lawmakers fear Biden’s Department of Education isn’t ready for it
Biden is expected to deliver broad student loan relief before payments resume on Sept. 1.
It’s less than two months away, and Democrats and the GOP are worried about its implementation.
The Department of Education says it’s ready to execute whatever Biden decides.
Much is at stake for millions of federal student loan borrowers over the coming months.
From the general cancellation of student loans to the resumption of student loan repayments after a two-year pause, borrowers are eagerly awaiting the announcement of any relief – but lawmakers on both sides of the aisle are wondering if President Joe Biden’s education department has the tools it needs to do it all effectively.
Education Secretary Miguel Cardona Told reporters last month, the ministry has been prepared.
“We’re ready to roll up our sleeves,” he said, adding that the department had “worked nonstop” on student debt relief.
Biden is considering $10,000 in student loan forgiveness for borrowers earning less than $150,000 a year, The Washington Post reported, and it’s likely to announce its final decision in July or August, near the expiration of the student loan payment break after August 31.
But with less than two months to go, with no indication of whether the break will be extended, lawmakers and defenders are not sure that all these actions can be carried out in such a short time.
“When it comes to preparedness, the Department of Education might as well take a page from President Lyndon Johnson’s weathered playbook: Crouch like a moron in a hailstorm. This does not surprise anyone”, Rep. Virginia Foxx, a senior Republican on the House Education Committee, told Insider.
“Despite what the secretary has said, there has been no effort to demonstrate that the department is ready to implement anything,” said Foxx, who has frequently critical student loan relief, added. “When it comes to wasting hundreds of billions of taxpayer funds, I hope the department is at least willing to share this plan with the American people – the same people who write the checks.”
A spokesperson for the Education Department told Insider it continues to review options for general relief and will communicate any plans directly to borrowers.
Borrowers have been promised ‘adequate notice’, but the deadline is 6 weeks
Student loan borrowers have faced a lot of uncertainty during the pandemic. While Biden extended the pause on student loan payments four times during his presidency, the extensions were announced very close to the date payments were due to resume, leaving borrowers little time to plan financially. Last month, Cardona assured borrowers, any announcement of further relief or extension would be made well in advance.
“I have no information to share with you about the ending,” Cardona said. Told lawmakers last month, referring to the pause in student loan payments. “I know we have a date, and it may be extended. Or it may start there. But what I will say is that our borrowers will have sufficient notice. And we will let you know. also. “
While he didn’t elaborate on what he meant by “adequate notice,” some might disagree that announcing any plan less than two months before payments resume counts as ” enough”.
Rep. Ilhan Omar of Minnesota led 55 of her fellow Democrats last month to send a letter to Cardona asking about her department’s readiness to implement broad student loan forgiveness “quickly and effectively,” but Omar’s office told Insider she has yet to receive a response.
foxx sent a similar letter last month in Cardona, saying, “You said you’re ready to act on student loan forgiveness, but you can’t be ready unless you know the plan; therefore, please describe, what that plan is ?”
Her office told Insider that she also hasn’t received a response.
Rep. Alexandria Ocasio-Cortez of New York has previously criticized the lack of notice the department has given to student loan borrowers, saying it makes it difficult for many people to plan financially.
“I think some people read these extensions as good policy, but I don’t think these people understand the panic and mess that is causing people to get so close to these deadlines just to prolong the uncertainty,” said Ocasio-Cortez. tweeted in April. “It doesn’t have the effect that people think it has.”
Broad relief isn’t the only thing on the department’s plate
While the most pressing issues for student loan borrowers right now could be a broad student loan forgiveness and an extended suspension of payments, the Department of Education has a lot more to focus on that could affect significantly many borrowers.
For example, the department announcement Last month, reforms were made to the Civil Service Loan Forgiveness Program, which forgives student debt for government employees and nonprofit organizations after 10 years of qualifying payments. These reforms included a waiver until October 31 which allows all previous payments, including those deemed ineligible, to be considered in the rebate progression.
But a recent analysis from the advocacy group Student Borrower Protection Center found that while 9 million public servants were eligible for student loan forgiveness, only 2% of them had had their debt erased since November 2020 – and less than 15% had filed paperwork to track their PSLF progress.
Richard Cordray, Head of Federal Student Aid, said at a conference last month, he was “pushing hard to get approval if we could extend it,” referring to the waiver, but that borrowers should expect the waiver to expire in October.
In addition, the ministry has just published its list of regulatory proposals to reform the student loan industry. These proposals included reforms of loan cancellation programs such as the PSLF and those of defrauded borrowers, as well as measures preventing the capitalization of interest. The ministry hopes to finalize these rules by November, with implementation next year.
In addition to all these reforms, the ministry oversees the to transfer from millions of borrower accounts to new student loan servicers after three companies announced they would end their federal contracts. It’s clear the department has a lot on its plate — and while Republicans want Biden end the relief and returning to pre-pandemic duties, aid proponents want to ensure borrowers aren’t kicked out too early in repayment.
One hundred and eighty student loan advocacy groups recently wrote a letter to Biden, saying“We strongly urge your administration not to threaten the financial security of people in debt as a tactic to fight inflation.”
They added: ‘People in debt cannot be held to payments for loans your administration has promised to cancel.
Read the original article at Business Intern