No student loan relief in $ 900 billion stimulus bill
Millions of Americans breathed a sigh of relief Monday night as Congress passed aincluding and extended unemployment benefits. But the back-up plan does not address a financial crisis that built up long before the start of the pandemic: .
Starting next month, tens of millions of student loan borrowers will have to resume all payments after nearly a year of abstention. An extension of the grace period was included in early drafts of the bill, officially known as the Supplementary Appropriations for Coronavirus Response and Relief Act, but was removed during final negotiations.
Student loan debt has been a looming disaster since before the pandemic, but widespread job losses and wage cuts, Federal Reserve Bank of New York. On average, student loan borrowers owe between $ 200 and $ 299 per month, depending on the Federal Reserve. For many, debt is simply unsustainable; about one in five borrowers are in default, according to the US Department of Education., made the problem worse. This year, student loan debt hit an all-time high, nearly $ 1.6 trillion among more than 40 million Americans, according to the
In March, the Education Department suspended all monthly federal loan payments, giving all borrowers an interest-free forbearance period until October. In August, an executive order from President Trump extended the program until December, and earlier this month Education Secretary Betsy DeVos extended the grace period until January.
“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been affected,” DeVos said in a Dec. 4 statement. declaration when the extension was announced. “The overtime also allows Congress to do its job and determine what action it deems necessary and appropriate. Congress, not the executive branch, is in charge of student loan policy.”
A Bench study November found that nearly six in ten borrowers said it would be “somewhat” or “very difficult” to resume loan payments next month.
There is still a possibility that the popular abstention program will be extended again after President-elect Joe Biden takes office on January 20. country trail Mr. Biden is committed to tackling the student loan crisis, including forgetting the $ 10,000 debt owed by students working in national or community service.
When student loan payments resume, the Department of Education does not expect a smooth transition. In his 2020 Annual Report, the department said it expects loan managers and the federal government “to face a heavy burden in ‘converting’ millions of borrowers into active repayment.” Some of these borrowers, the report warns, will become delinquent.