President Biden makes plans to restart student loan payments

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The Biden administration is making plans for how it will restart federal student loan payments next year when the hiatus on monthly payments ends.

The Education Department is considering proposals to give borrowers more options and flexibility as they face student loan repayments for the first time in two years. Options include an initial grace period for missed payments.

Education officials are also discussing policies to make it easier for millions of borrowers to stay on income-based repayment programs, allowing borrowers to avoid a sudden increase in their monthly payment.

Plans are being made to avoid an increase in delinquencies when payments resume in February 2022. Currently, more than 40 million borrowers owe $ 1.59 trillion in student loan repayments. The situation has drawn political lines as well as Progressive Democrats pressured Biden to cancel widespread student loan debt since the day he was sworn in.

Education Secretary Miguel Cardona said he wanted a smooth “acceleration” for borrowers to start payments again. The department’s head of student aid, Rich Cordray, told Politico the agency was discussing a major public awareness campaign that included paid ads, to educate student loan borrowers about their options.

Education Ministry officials have instructed their student loan officers to create a “safety net” for borrowers in the first three months of resuming their payments. Borrowers who miss a payment during the grace period would not be penalized or knocked out on their credit reports.

The department also plans to contact certain groups of subprime student loan borrowers directly, including those who were in arrears before the pandemic, never graduated from college, or have recently started repaying their loans. The department is also extending the opening hours of its call center to cope with an increase expected in the coming months.

Another move officials are discussing is a proposal to make it easier for borrowers to enroll borrowers in income-based repayment programs. These programs typically require borrowers to prove their income and family size annually. This requirement was suspended during the pandemic, but now that payments are restarting, 9 million borrowers will have to recertify their income again.


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