Lawmakers Call for Extension of Student Loan Forbearance

Laptop-BooksOngoing pandemic and new variant cited as reasons for more student loan relief in 2022, when federal student loan payments and interest are set to resume.

12/9/2021 8 A.M.

2 minute read

Federal student loan payments are set to resume in February after nearly two years on hold during the COVID-19 pandemic, but members of Congress say another extension is in order due to the omicron variant.

However, the Biden administration has said the extension, announced in the fall, would be the last for federal student loan payments.

Student loan payment extensions, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, started with six months of relief for borrowers in March 2020.

The relief includes a pause on loan interest as well.

Senate Majority Leader Chuck Schumer, D-N.Y., has been leading the charge for President Joe Biden to extend the pause on student loan payments since the omicron variant emerged, Forbes reports.

“With omicron spreading, the uncertainty with what happens next demands at least one more extension of the student loan payment pause,” Schumer said at a press conference, according to the article.

Another group of senators is requesting for the Biden administration to wave interest when student loan payments do resume, according to a letter from the office of U.S. Sen. Raphael Warnock, D-Ga.

While the Biden administration has not yet responded to the call for extended student loan relief, Federal Student Aid, run by Chief Operating Officer Richard Cordray, recently announced it is ending contracts with remaining private debt collection agencies responsible for federal student loan servicing.

Cordray said “that collecting on defaulted loans would now be handled by five private contractors hired by the department last year to provide customer support to borrowers as they navigate the repayment process,” ACA International previously reported.

The contract cancellations will impact ACA members. Before Cordray’s announcement in November, the DOE had recently extended the federal student loan servicing contracts through December 2023.

“This decision, made for the sole purpose of scoring political points, will cause hundreds of Americans to lose their jobs,” said Leah Dempsey, ACA’s vice president and senior counsel of federal advocacy. “It will also elongate and complicate the process for former students to address legal obligations, harming both consumers and the taxpayers left on the hook.”

ACA continues to push back on flawed policymaking decisions that unfairly target the accounts receivable management industry and will continue to educate Congress on why consumers and the economy are harmed when professional debt collectors are removed from the process.

Related content from ACA International:

Big Waves Coming When Student Loan Payments Resume

CFPB Issues Guidance to Use with Federal Student Loan Borrowers

 

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