(TheLastPatriotNews.com) – The repayment of student loans officially restarted on Sunday, October 1, after a pause of over three years implemented by the Biden administration on the grounds of the COVID-19 pandemic. In June, the US Supreme Court foiled its plan for a $400 billion forgiveness scheme.
The administration’s reactivation of student loan accounts affects over 28 million borrowers, The Hill informs in a report.
It occurred against the backdrop of a last-minute House deal averting a government shutdown for another 45 days.
“It’s a sad day for student loan borrowers and for the country that student loans have to come back on, especially with the threat of a looming government shutdown,” Natalia Abrams, head of the Student Debt Crisis Center nonprofit, said last week.
In July, a poll by Life and My Finances found that only about 22% of borrowers had a plan for student loan repayment, while half didn’t earn enough to afford to make payments.
The same month, the Biden administration announced it was recalculating the balances of 804,000 borrowers involved in the government’s income-driven repayment program.
The Education Department has now developed what is described as an “on-ramp” repayment plan under which borrowers can defer payments over the next year while facing limited consequences – such as avoiding delinquent status.
At the same time, their credit score would still be affected, and interest would continue to accrue, the report notes.
The Hill points out that millions of Americans’ life decisions were already affected by student loans even before the coronavirus pandemic.
“In typical pre-COVID times, when people are paying their student loans, they’re not buying their children’s medication, they’re not able to save for a house or retirement,” Abrams said.
“We know from polling borrowers for so many years that they were using their COVID pandemic money to pay for basic needs, and so the worry is that now they won’t be able to,” she added.
The report notes the GOP argues that Biden’s delays and relief promises worsened borrowers’ situation.
“Republicans have brought forth a solution that holds colleges accountable for rising costs and empowers students and families to make the best decisions for their college careers and beyond. But if Congress fails to act, students will continue to drown in debt without a path to success,” commented Senator Bill Cassidy (R-La.), ranking member of the Health and Education Committee.