- DOE suspends collection of student loans for all borrowers under the federal Family Education Loan program.
- Biden had extended the break on federal student loan payments until September, but that did not apply to private loans.
- This will apply to 1.14 million borrowers who have defaulted on private FFEL loans.
The Biden administration’s Education Secretary Miguel Cardona has taken several targeted steps to tackle student debt relief, and he’s not yet finished.
On Tuesday, Cardona announced he would extend the hiatus on federal student loan interest and collections on all overdue loans under the Federal Family Education Loan Program (FFEL).
President Joe Biden had extended the hiatus on federal student loan payments until September, but that did not apply to FFEL program borrowers whose loans were held by private lenders, amounting to $ 1.14 million. ‘borrowers. Cardona’s new rule will extend the 0% interest rate as well as the payment break for them.
“At a time when many student loan borrowers face economic uncertainty, we are ensuring that the relief already provided to borrowers on loans held by the Ministry is available to more borrowers who need it. the same help so that they can focus on their basic needs, “Cardona said in a statement.” Our goal is to enable these distressed borrowers to get the same protections previously offered to tens of millions of dollars. ‘other borrowers to help overcome the uncertainty of the pandemic. “
A senior department official said during a press call on Tuesday that the new rule is particularly important right now because it is tax season, and it will ensure that the Treasury’s compensation program does not capture refunds. borrowers tax due to overdue debt payments.
According to a press release, the DOE will endeavor to automatically return any tax refunds seized in the past year, and borrowers who have made loan repayments in the past year will have the option to apply. reimbursement. The department head added in the press appeal that any borrowers who defaulted on their student loans during the pandemic will be brought back into good standing, and the DOE will ask credit bureaus to clear default records.
The FFEL program ended in 2010, but according to DOE data, 11.2 million borrowers still have FFEL loans outstanding totaling over $ 248 billion. And while the department has acquired some of the outstanding FFEL loans, many are still privately owned and have not been affected by the earlier pause on student loan payments held by the federal government.
The new rule comes a day after the DOE announced the cancellation of student debt for 41,000 disabled borrowers, and two weeks after approximately 72,000 defrauded borrowers received the debt cancellation.
But progressive lawmakers still want Biden to do more and write off up to $ 50,000 in student debt for every other American affected.
—Elizabeth Warren (@SenWarren) March 29, 2021
Senate Majority Leader Chuck Schumer noted Monday: “We ask you, email, call, write to President Joseph Robinette Biden and tell him you want this done.”