The
Education Secretary
It’s the latest attempt to straighten out a process that has been marred by errors after student loan payments restarted in October. Tens of thousands of borrowers have received billing statements late or with incorrect amounts as servicers scrambled to jumpstart the process.
The department previously withheld
“While we are confident the number of borrowers with
Aidvantage and EdFinancial didn't immediately return messages seeking comment.
Borrowers who didn’t get statements within the required 21 days before payment will be placed in administrative forbearance while problems are resolved. That means their payments will temporarily be paused and any interest that accrues will be removed. Time spent in forbearance will continue to count toward Public Service Loan Forgiveness and other cancellation through income-driven repayment plans.
“We are committed to providing a seamless repayment experience for borrowers,” said
More than 22 million borrowers started getting bills again in October after a moratorium that froze payments and interest for more than three years. Bringing that many borrowers online at the same time was an unprecedented task that overwhelmed servicers hired by the government. Many borrowers received bungled bills only to face hours-long wait times for customer service.
To ease borrowers back, the
Early figures from the Biden administration found that 60% of borrowers with payments due in October had made those payments by mid-November.
Even as payments restart, the administration is working toward a new proposal for widespread student loan cancellation after the Supreme Court rejected Biden's first plan last June.
The new plan has yet to be finalized but the department hopes to provide targeted relief to certain groups of borrowers, including those with loans taken out more than 25 years ago, those with snowballing interest, and borrowers whose colleges leave graduates with high levels of debt compared to their earnings.
The new proposal is going through a process known as negotiated rulemaking. A final proposal is expected in coming months, although opponents are almost certain to challenge the cancellation in court.
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