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Student loan service staff asked to stop sending payment notices


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According to two sources familiar with the matter, federal student loan service providers have been asked to stop sending payment reminders to borrowers.

Developments suggest the Biden administration may be considering extending the pandemic-era payment moratorium on federal student loans again. This policy has been in effect since March 2020, allowing people to skip paying their student debt without having to accrue any interest.

Nearly all of the borrowers took advantage of the bailout opportunity.

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The payments are expected to resume after August 31, but the pause could be extended until 2023, the sources said.

A spokesperson for the US Department of Education said it continues to assess the impact of both the coronavirus pandemic and the economy on student borrowers. The Education Department will talk directly to lenders about ending the payment pause when a decision is made, they added.

More than 40 million Americans are in college debt, owed a cumulative $1.7 trillion, a balance that far exceeds credit card debt or unpaid auto debt. A quarter – or more than 10 million people – were delinquent or defaulted on debt before the pandemic. These grim numbers have led to comparisons with the 2008 mortgage crisis.

The sources said the Biden administration is currently deciding how to proceed with student loan forgiveness and it is likely they could issue a notice of cancellation at the same time as extending the payment pause. .

Clearing billions of dollars of debt can take a long time, and restarting bills before the bailout is complete can be a mess for lenders and borrowers alike.

Most recently, the White House was reportedly leaning toward canceling $10,000 student debt for most borrowers, but it is increasingly under pressure to go further. Politicians like Senate Majority Leader Chuck Schumer, DN.Y.and groups like NAACP more than one pushed the president to wipe out at least $50,000 for all.

Wisdom Cole, national director of the NAACP’s Youth and Colleges Division, said that just having $10,000 would be “a slap in the face” for Black borrowers, who often have to borrow than their white counterparts due to the wealth disparity between the races.

However, student loan forgiveness is also likely to anger many Americans, including those who have never taken out a loan to study or go to college. Some Republicans has said it will try to block President Biden’s attempt to cancel the debt. Rep. Kevin Brady, R-Texas, ranking member of the House Ways and Means Committee, recently called for student loan forgiveness”a gift for highly educated college graduates. “

Overall, however, a majority of voters (62%) support student loan forgiveness, according to a poll by Morning Consult.



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