Loan payment

Citing inflation, advocates urge extension of student loan payment hiatus

  • Student loan payments resume in 53 days.
  • Advocates say new inflation data showing a 40-year high is a reason for Biden to extend the payment break.
  • The Ed. The department still plans to resume payments on February 1, but says it is monitoring the Omicron variant.

The last time Americans saw inflation this high was when Ronald Reagan was president, according to data from the Bureau of Labor Statistics on Friday.

This prompted defenders of student loan borrowers to ask a question: Why does President Joe Biden always resume payments in less than two months?

The Consumer Price Index, which measures inflation in the United States, rose 6.8% year-over-year in November, showing how much Americans’ portfolios are squeezed by the increase prices in all areas. Gas, food and energy prices have all risen, and in 53 days, 43 million federal student loan borrowers will have to add monthly student debt bills to their monthly spending. It comes as the Student Debt Crisis Center found in a recent survey, 89% of borrowers with full-time jobs don’t feel financially secure enough to resume their payments next year, given that much of their income will be spent on these monthly bills. instead of commodities.

“Today’s economic data is the strongest argument imaginable for a change of course as the Biden administration rushes headlong into a hasty and ill-timed restart of the entire student loan system,” he said. Student Borrower Protection Center executive director Mike Pierce said in a statement.

“American families are now forced to pay more to meet their basic needs, as the prices of rent, food and energy skyrocket,” he continued. “Adding the burden of a student loan bill will strain the finances of millions of families. Washington does not need this money, unlike American families. “

Student loan payments have been suspended and accumulate 0% interest since the start of the pandemic, but in August, Biden’s Education Department made it clear that the extension to Jan.31, 2022 was “final.” . Advocates and lawmakers are urging the department to change its mind not only because of soaring inflation, but also because of the uncertainty that the new Omicron variant brings.

“This debt is just overwhelming for the people,” Senate Majority Leader Chuck Schumer said earlier this week. “If we don’t extend the hiatus, interest rates will pile up. Students owe a fortune. And with Omicron here, we’re not doing as quickly as we would like.”

Sandy Baum, a non-resident senior researcher at the Urban Institute’s Center on Education Data and Policy, told Insider she’s worried about the transition to reimbursement, especially for those who struggle to navigate the system. . But she noted the availability of income based repayment plan, in which borrowers can use this plan to make monthly payments according to their means.

She added, however, that the plan “is not perfectly structured. There are obstacles to entering it, and there are obstacles to staying there.”

“If we are to be able to continue offering loans, we have to have a system that forces people who can pay to pay,” Baum said. “If you don’t have money and you don’t have a job, then of course you can’t repay and there must be some provision for that.”

The Department of Education still plans to resume payments in February and Recount Politico in a statement that it “is still evaluating the impact of the Omicron variant” and in the coming weeks “will release more details on our plans.”

Advocacy groups argue borrowers need answers now on a new extension.

Biden “should immediately extend the student loan payment hiatus to give families confidence that they won’t have to choose between paying for food and expensive student loans,” said Remington Gregg, counsel for civil justice and consumer rights at Public Citizen, in a statement. . “Payments are expected to resume in less than 60 days, even if another strain of the coronavirus is hampering people’s ability to return to work and return to normalcy. The choice couldn’t be clearer.”