Home Borrower Student loan borrowers lack ‘vital’ information: Warren

Student loan borrowers lack ‘vital’ information: Warren

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  • Elizabeth Warren led her colleagues to request information on the restart of student loan payments.
  • She expressed concern about the lack of clarity around the timeline for resuming payments.
  • The student loan break kicks in on May 1, and many borrowers are worried about another monthly bill.

Massachusetts Sen. Elizabeth Warren worries that 43 million federal borrowers don’t have the information they need to resume payments in just over two months.

On Wednesday, Warren, along with Representatives Lauren Underwood of Illinois and Colin Allred of Texas, led five of their fellow Democrats to send a letter to Secretary of Education Miguel Cardona regarding the date for resuming student loan payments on May 1. They wrote that they were “concerned” about the lack of clarity around the timeline for resuming payments, saying “millions of borrowers appear to be at risk of missing vital information about restarting payments.”

Lawmakers wrote in the letter that borrowers need timely and detailed information regarding their loan repayments. Specifically, they want to know when the first payments will be due and whether that date will be the same for all borrowers, as well as information about defaults and first non-payment date will affect credit score. of the borrower.

“Providing these details is essential to ensure that borrowers are properly informed of the restart and that harm to borrowers is minimized during the transition,” they wrote.

They gave the Department of Education until March 9 to respond to their demands.

President Joe Biden extended the pause on student loan payments for a third time, through May 1, marking the continuation of pandemic relief measures for federal borrowers burdened by the 1,000 student debt crisis. 7 trillion dollars. But with that restart date fast approaching, lawmakers like Warren not only want to make sure borrowers are equipped to pay another monthly bill — they want Biden to fulfill his campaign pledge and largely forgive student debt.

Insider reported in January that, according to the Government Accountability Office (GAO), 50% of federal student loan borrowers were identified as “at risk” of falling behind on payments in May. The Department of Education even acknowledged to the GAO that it would be “difficult to motivate” student borrowers to repay their debt after a two-year hiatus, and it said it would meet this challenge by increasing communications and sensitization.

Still, Warren and his colleagues believe that raising awareness is not enough, and as the resumption of payments approaches, many borrowers are worried about their financial ability to repay their debt. For example, the Student Debt Crisis Center found in a new survey that 93% of student loan borrowers are not ready to resume payments, and 61% of borrowers who could easily afford payments before the pandemic are now in trouble. .

“Our results show that the ongoing pandemic combined with unprecedented inflation are huge hurdles for borrowers who are, overall, not ready to resume payments, are struggling to meet their basic needs and are confused about their options moving forward,” Natalia Abrams, president and founder of SDCC, said.