Finance

Democrats press Education secretary over plans to resume student loan payments

A group of Democrats sent a letter to Secretary of Education Miguel Cardona this week pressing for further information about how the administration plans to resume federal student loan payments and ensure borrowers receive adequate support.

Sen. Elizabeth Warren (D-Mass) and Reps. Lauren Underwood (D-Ill.) and Colin Allred (D-Tex.) led their colleagues in a letter to Cardona on Wednesday, seeking “additional detail on the scheduled resumption of federal student loan payments following the expiration of the payment pause on May 1, 2022.”

Federal student loan payments were first paused in early 2020 under an moratorium set in place by the Trump administration as the coronavirus pandemic began to take hold in the U.S. The temporary hold, which also extends to interest accrual, has been lengthened several times under the past and current administrations.  

Biden last extended the moratorium in December through May amid mounting pressure from members of his own party, many of whom have called on the White House to take bolder action on student loans by approving widespread forgiveness. 

The White House said last year it requested a memo from Cardona’s office detailing whether Biden, who called for at least $10,000 in student loans to be canceled per borrower on the campaign trail, has the ability to unilaterally cancel student loans across the board.

In their letter to Cardona this week, the lawmakers wrote that, while they “appreciate the Biden administration’s actions to extend the payment pause,” they are concerned that “with less than 70 days until the scheduled expiration, borrowers may lack clarity about the timeline associated with the resumption of payments.”

“Providing this detail is critical to ensure that borrowers are adequately informed about the restart and that borrower harm is minimized during the transition,” they wrote.

Lawmakers said millions of borrowers “appear to be at risk of missing out on vital information about the payment restart,” before citing estimates from the Government Accountability Office (GAO) saying roughly half federal student loan borrowers “are at increased risk of delinquency and in need of additional, targeted engagement before and after payments resume.”

While lawmakers said the Education Department (ED) selected email as its primary communication method for borrowers, they added the office “was missing valid email addresses for approximately 5.5 million borrowers as of December 2021.”

“The contractor managing defaulted loans, moreover, did not have email addresses for about 25 percent of defaulted borrowers, potentially leaving these borrowers in the dark about options for getting out of default,” they wrote.

They also pointed out significant changes seen in federal student loan servicing in the past few months that they said “risk compounding borrowers’ lack of clarity around the restart,” including the announced departures of three servicers from the federal student program since 2021.

Lawmakers are pressing the department information on timing for due dates of student loan payments; when the latest first payment is due; how long borrowers who don’t make payments following the May deadline have until they become delinquent; are charged late fees; and have negative credit reports triggered, among other things. 

Lawmakers are requesting answers by March 9.

The Hill has reached out to the Education Department for comment. 

Sens. Margaret Wood Hassan (D-N.H.) and Tammy Duckworth (D-Ill.) joined lawmakers in signing the letter, along with Reps. Dina Titus (D-Nev.), Bill Foster (D-Ill.) and Lucy McBath (D-Ga.).

Tags Bill Foster Colin Allred Dina Titus Elizabeth Warren Lauren Underwood Lucy McBath Miguel Cardona Tammy Duckworth
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