In one of his first actions as president, Joe Biden will ask the Education Department on Wednesday to extend the nearly one-year hiatus on student loan payments until September 30, keeping the promise to the incoming administration’s campaign to prioritize and start processing the nearly $ 1.6 trillion. Debt crisis.
As of March, all federal student loan payments have been suspended within the framework of the federal government COVID-19[female[feminine reply. An extension of the grace period was included in the early drafts of the December stimulus package, but was cut in final negotiations. Before Mr Biden’s executive order, which was due to be signed in the Oval Office on Wednesday afternoon, payments were due to resume in late January.
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Student loan debt has been a looming financial problem since before the pandemic, but coronavirus-related job losses and widespread pay cuts, especially among millennials, have exacerbated the problem. Last year, federal student loan debt hit an all-time high, nearly $ 1.6 trillion among more than 40 million Americans, according to the Federal Reserve Bank of New York. On average, student loan borrowers owe between $ 200 and $ 299 per month, an amount that for many is simply unsustainable; about one in five borrowers are in default, according to the US Department of Education.
A Bench study report found that nearly 6 in 10 borrowers said it would be “somewhat” or “very difficult” to resume loan payments next month.
In campaign, Mr. Biden promised voters tackling student loan debt would be one of his top priorities as president. But exactly how the incoming administration plans to handle the $ 1.6 trillion debt remains unclear. As recently as last week, Biden gave his backing to congressional action to write off $ 10,000 in federal student debt per borrower, but some of his more progressive Democratic colleagues say that is not enough. In the 2020 presidential primaries, Senator Elizabeth Warren of Massachusetts offered to forgive up to $ 50,000 in debt and Senator Bernie Sanders of Vermont called for the cancellation of all student loans.
In December, Biden announced that Connecticut’s school principal, Miguel Cardona, was his choice for education secretary. If confirmed, Dr Cardona, who has spent two decades of his education career as a public school teacher, would offer a direct juxtaposition to the former Secretary of Education in the Trump administration. , Betsy DeVos, a Billionaire Champion of School’s Choice.
Under DeVos, the Education Department has warned that the transition will be chaotic when student loan payments resume. 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.
First published on January 20, 2021 / 8:09 AM
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