Loan payment

Resumption of student loan payments has 2 main Republicans “deeply concerned”

  • Representative Virginia Foxx and Senator Richard Burr said they were concerned about the resumption of student loan payments in February.
  • They said the education ministry did not detail specific plans for the transition of borrowers from three major service providers that have closed.
  • It has “deeply concerned them” that the payment break will be lifted in four months.

When President Joe Biden extended the student loan payment hiatus in August until the end of January, his Education Department made it clear that this would be the “final extension” for the $ 43 million. borrowers receiving federal student loans.

Two prominent Republicans said the department had not provided enough information on how the transition to reimbursement would be made in just four months.

On Tuesday, Representative Virginia Foxx and Senator Richard Burr, senior members of the House and Senate Education Committees, sent a letter Education Secretary Miguel Cardona to ask for more information on how he plans to smoothly put millions of borrowers back into repayment. They said that prior to the August extension, Cardona did not respond to their June 2 letter regarding the department’s plan to restart payments and their questions “still remain unanswered.”

“The lack of clarity and direction on the process surrounding borrowers returning for repayment is as troubling as the process is uncertain,” Republican lawmakers wrote. “We remain deeply concerned about the Department’s ability to ensure a smooth transition to repayment within four months. “

Lawmakers also expressed concern about borrowers transitioning to new student loan companies after three of them announced they were not considering renewing their federal loan service contracts. The Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources announced that they would shut down their lending departments in June, and just hours after the publication of Tuesday’s letter, Navient – which serves 6 million borrowers Federal Student Loans – has announced its closure plans, too.

This means the Education Department will have to administer the transition of nearly 16 million borrowers to new student loan companies, and Foxx said the two letters she sent regarding the transition also went unanswered. .

Insider previously reported that Richard Cordray, the head of the Federal Student Aid Office (FSA), acknowledged the challenges of restarting student loan payments in February. Speaking to the Education Finance Board earlier this month, he noted the “psychological hurdle” borrowers might encounter with the resumption of payments.

He said that “we can expect that many, many borrowers will not be eager to return to repayment when they have been led to believe, or even hope, that it will never happen. Overcome this psychological hurdle with millions of Americans can be a lot tougher job than we realize. ”

But, as some borrowers have told Insider, the problem is far more than psychological – they fear they will no longer be able to afford to make payments again in February.

“Restarting payments makes me very anxious because I somehow have to find that extra $ 200,” said one borrower. “I just don’t have it.”

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