Last week, a group of Democratic senators sent a letter to President Biden requesting that the break on federal student loan payments be extended until at least March 2022. Additionally, South Carolina State University forgave over $9 million in institutional student loan debt for qualifying students. Here’s what to know about this week’s student loan news.
2 current trends within student loans for the week of July 19, 2021
1. Democratic senators call on Biden to extend break on student loan payments
On July 13, Democratic Sens. Elizabeth Warren and Edward J. Markey sent a letter to President Biden urging him to extend the current payment and interest pause on federal student loans to at least March 31, 2022. This push comes after an inquiry into federal student loan servicers’ plans for navigating the current end of the forbearance period on Sept. 30.
“The resumption of payments is presently scheduled to begin on Oct. 1, 2021, but the information we received in our inquiry strongly supports an extension of the pause on student loan payments and interest,” the letter reads. “The responses to our inquiry indicate that neither student loan borrowers nor student loan servicers are prepared for payments to resume.”
The letter cites multiple hurdles for restarting repayment on Oct. 1. Not only have borrowers been out of contact with their servicers during the pandemic payment pause, but servicers themselves will require more staffing to support such a large transition. FedLoan Servicing also recently announced that it will not be renewing its contract with the U.S. Department of Education, and transitioning all of FedLoan’s existing loans to other servicers will add additional strain.
How this affects student loans
The administration has yet to make an announcement about extending the forbearance period, and as of right now, it’s set to expire on Sept. 30, 2021. Borrowers should prepare to start making the regularly scheduled payments or look into alternative or income-driven repayment options if needed.
If there is an extension, it’s possible that borrowers could see another few months of relief. Regardless of the timing, borrowers will hear from their servicers before payments resume.
2. South Carolina State University forgives $9.8 million in student loan debt
South Carolina State University announced on July 17 that almost $10 million in institutional student loan debt will be forgiven for students financially impacted by the COVID-19 pandemic. Alexander Conyers, in his first executive decision as the university’s acting president, said in his statement: “No student should have to sit home because they can’t afford to pay their past due debt after having experienced the financial devastation caused by a global pandemic.”
The university is using COVID-19 relief funds granted to it by the federal government through the CARES Act and the American Rescue Plan to provide forgiveness for more than 2,500 students. Most of these students were previously registered but could not continue their education due to past-due balances. The forgiven debt is loans taken out through the university, not through the federal government or private lenders.
How this affects student loans
South Carolina State University is one of many colleges that have used CARES Act and American Rescue Plan funds to help clear the institutional debt of their students. A portion of pandemic funding for universities was intended to help struggling students, which means that more students could see financial relief in the coming months.
Whether you’re new to student loans or well into repayment, it’s wise to stay informed about how your student loan rates could change. As 2021 continues, more opportunities for cheaper loans or loan forgiveness could open up; keep an eye on the Bankrate student loans news hub for the latest trends.