Shockwaves As 40% Of Student Loan Borrowers Miss Initial Payments After COVID Pause

Written By BlabberBuzz | Sunday, 17 December 2023 12:00 PM
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The U.S. Department of Education revealed on Friday that 40% of student loan borrowers failed to meet their initial loan repayments since the three-year pause induced by the COVID-19 pandemic.

In a blog post, U.S. Undersecretary of Education, James Kvaal, disclosed that 60% of borrowers whose payments were due in October had fulfilled their obligations by mid-November. He further noted that of the 22 million individuals who had payments due in October, over 4 million were making payments for the first time.

Kvaal acknowledged the challenges faced by some borrowers, stating, "While most borrowers have already made their first payment, others will need more time. Some are confused or overwhelmed about their options." He emphasized the Department's commitment to supporting student loan borrowers as they navigate the repayment process, adding, "We want to make sure borrowers know that our top priority is to support student loan borrowers as they return to repayment."

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Student loan repayments resumed on October 1. To ease the transition, the Biden administration has introduced an "on-ramp" repayment program, effective through October of next year, which minimizes penalties for missed payments.

Kvaal explained, "To give borrowers breathing room while they work student loan payments back into their monthly budgets, we created the 12-month on-ramp period. Until next September, borrowers will be protected from the harshest consequences of missed payments, such as delinquency, default, and mandatory collections."

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In a related development, President Biden announced last week a $4.8 billion student loan forgiveness initiative for federal borrowers employed in public service fields. A significant portion of these borrowers should have already qualified for the pre-existing public service loan forgiveness program, but had not yet received it due to administrative errors.

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President Biden expressed his commitment to improving the student loan system in a statement, saying, "From Day One of my Administration, I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity – not unmanageable burdens of student loan debt. I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams."

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