- The Department of Education has told student loan companies to suspend outreach to resume payments, the WSJ first reported.
- The ministry took the same action before the previous extension of the suspension of payments.
- Lawmakers and advocates have sounded the alarm over the lack of notice of any relief to come.
Student loan repayments are expected to resume in just over a month, but President Joe Biden’s education department is telling loan officers to stop communicating this to borrowers.
The Wall Street Journal first reported Monday that the department has asked companies that service federal student loans to stop sending billing statements to borrowers before payments resume after Aug. 31.
Scott Buchanan, executive director of the Student Loan Servicing Alliance — a trade group that represents all federal loan officers — told the Journal that “we are nearly 30 days away from the scheduled resumption and the department has told officers to delay resume communications for a few months.”
“Perhaps the department expects the White House to throw the box on the road again,” Buchanan said. He also told NBC News that if there were still no guidance from the department by August, it would create an “untenable position” for repairers and borrowers due to lack of time for planning.
The Student Loan Servicing Alliance did not immediately respond to Insider’s request for comment.
Although the department and the White House have yet to comment on another extension, it is possible that one is on the horizon. In March, when payments were set to resume on May 1, the department ordered services to suspend outreach to resume payments, and the pause ended up being extended a month later.
Prior to this point, however, the department argued that borrowers should still plan to resume payments in September. Biden is also making a decision on a broad student loan forgiveness, with reports suggesting it will likely be $10,000 in relief for borrowers earning less than $150,000 a year.
With that relief looming, some Democratic advocates and lawmakers have pushed for an extension of the payment pause to ensure any discounts are fully implemented before borrowers are hit with another monthly bill. 180 organizations recently wrote to Biden urging him to “adopt robust student debt forgiveness that is not means-tested or require an opt-in for participation and to fully implement this policy before the due date of any student loan bill”.
As Insider previously reported, if Biden chooses to make student loan relief subject to income thresholds, implementation will be a significant administrative burden. Relief is unlikely to be automatic given that borrowers would have to verify their income in one way or another. Democratic lawmakers have also urged the president to oppose an income cap, to ensure the relief is as broad as possible.
If the hiatus extends again, however, Republican lawmakers are unlikely to be satisfied. Many have criticized past break extensions as unnecessary and costly for taxpayers, with some going so far as to introduce legislation preventing Biden from extending the break and largely canceling student debt.
Regardless of what Biden decides, August is less than a week away and although Education Secretary Miguel Cardona has promised borrowers ‘sufficient notice’ for any relief, plans remain on hold. .