Student loan borrowers may get more time before payments must resume

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It has been more than a year since borrowers stopped making payments on their state student loans.

This break is currently expected to end in September.

However, U.S. Secretary of Education Miguel Cardona told the Senate Funds Committee this month that he was involved in talks about whether this is the best time to resume payments. And in May, Cardona said at an Education Writers Association conference that an extension of the payment break was on the table.

The White House is under increasing pressure to give borrowers more time.

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Senator Elizabeth Warren, D-Mass., And Senate Majority Leader Chuck Schumer, DN.Y., sent a letter to President Joe Biden this month asking him to extend the payment break until March 2022. That would mean that most borrowers haven’t paid off their student loans in two years.

More than 120 organizations, including the American Civil Liberties Union, the National Consumer Law Center, and the Consumer Federation of America, also recently wrote to the president asking him to extend the debt break until the student debt is canceled.

“Your administration now has a unique chance to repair the damage caused by federal and state political failure, decades of government mismanagement and industrial abuse – an opportunity and an obligation that must be met before action taken to resume monthly student loan payments, “they wrote.

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There are more than 44 million student loan borrowers in the U.S. and the country’s outstanding balance is projected to exceed $ 2 trillion by 2022. The average student loan balance is about $ 30,000, up from $ 10,000 in the early 1990s, with many borrowers being $ 100,000 or more.

The average bill is $ 400 a month, and research has found that these payments make it difficult for people to save for their future, start businesses, and raise families.

Most student loan borrowers have accepted the government’s offer to suspend payments. Only around 11% of borrowers are paying back, according to the latest analyzes by university expert Mark Kantrowitz.

Borrowers struggled with Covid, more than 1 in 4 were in default or in default. After more than a year of record unemployment, this pain has only worsened. The Congressional Budget Office recently forecast that the unemployment rate for younger workers will improve more slowly than the overall rate.

“The best guess is that the payment break and the interest waiver will be extended if the unemployment rates for university graduates have not normalized as of September 30, 2021,” said Kantrowitz.

The unemployment rate for people with an associate degree was more than 5% in May, compared to 2.8% before the pandemic.

Almost 3% of Bachelor graduates remain unemployed, compared to around 2.2% before Covid.

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