In this article, I’m going to talk about a recent survey from StudentDebtCrisis.org revealing staggering data about federal student loan borrowers. And also, an extension to the student loan payment pause may still be on the table.
90% of Student Loan Borrowers Aren’t Ready!
A recent survey from StudentDebtCrisis.org reveals that 90% of federal student loan borrowers aren’t ready to make payments when the forbearance ends September 30.
Student Debt Crisis is the nation’s largest student debt advocacy organization. They have partnered with Savi, a social impact tech company helping solve the crisis, and completed a survey of 23,845 student loan borrowers.
This survey is the third part of a series called Student Debt x COVID-19, which looks into the effects of the pandemic among student loan borrowers.
According to the survey, “9 in 10 or 90% of borrowers are not ready to begin payments again on October 1. ” And that at least 65% won’t be ready to resume paying until September of 2022. There are those who aren’t even sure when they will be ready to make repayments.
The survey doesn’t define what ‘ready’ means but we can assume that ‘ready’ in this case is financially ready or mentally ready, or both.
I can sympathize to certain levels with this sentiment because it is not easy to make payments to your student loans when there isn’t a guarantee that you can do your job safely during this time.
A lot of people want to work and make money, but the dangers of the virus still lingers. We’ve heard about the different variants popping up that are more dangerous than the ones that we know of right now.
Yes, you can work from home, or if you’re working outside and your place of work may have put health & safety precautions and whatnot, but that’s just it — a precaution. It doesn’t stop the virus from getting to you. If you get sick, it will take a toll on your physical, mental & financial health.
Aside from the uncertainty of that, quarantine has made us feel a little bit disengaged from actually working. Working from home has changed our perspective about work. Then, there are those who are getting benefits and stimulus from the government, so why work?
But the problem still remains, student debt is weighing heavy on a lot of borrowers and it has made life harder, especially during this time. The current payment pause is “essential to their financial wellbeing” according to 75% of the respondents. If before the pandemic 26% of student loan borrowers rated their financial wellness as “poor” or “very poor,” now that number has risen to 43%.
Student debt is even worse for people of color during the pandemic. 94% of black borrowers do not feel financially secure to resume payments, and 81% of Latinx borrowers still rely on COVID-19 relief for federal student loans.
What’s even crazy is that “over one-third of American Indian or Alaska Native, Black or African American, or Native Hawaiian or Other Pacific Islander respondents say their loan servicer has not communicated updates at all.” They don’t even know that payments are resuming this October 1!
So imagine the stress you’re going to feel knowing that you aren’t financially or psychologically prepared for this change. You’ll need to make sudden changes to your finances and probably have to make some calls to make sure that you’re not falling behind on those payments.
But there is some shift in perspective as well though. In that survey, 86% said that the payment pause has made them more likely to support debt cancellation. And 52% said that they are more optimistic about their student loan situation with Biden’s administration.
Payment Pause Extension?
So, is there really a reason to be optimistic about student loan cancellation?
Maybe there is. In June, a small development happened but not about cancellation. There maybe a possibility of an extension for the student loan payment pause. Education Secretary Miguel Cardona told the Senate Appropriations Committee, the committee that has jurisdiction over all discretionary spending legislation, that he was involved in talks about whether or not it was the best time to resume payments.
These talks have been ongoing since May when Cardona said at an Education Writers Association conference that extending the payment pause is still on the table. He says, “It’s not out of the question, but at this point it’s September 30.”
He also adds that the department would need to work with borrowers “to make sure that we ramp up the communication and the clarity so that it’s smooth as possible.”
On the final week of June, 64 U.S. representatives and senators, including Senate Majority Leader Chuck Schumer, signed a letter urging Biden to extend the payment pause until March 31, 2022 or until the economy reaches pre-pandemic employment levels — whichever is longer.
So there you go. In terms of payment pause extension, there are two dates being thrown around. One is from survey respondents, or the borrowers themselves, which is September 2022. And the other one is March 31, 2022, but this date is tied to the recovery of the economy.
Education Department Hires A Student Loan Expert
On another note, just this week, the Education Department just hired a student loans expert. Toby Merrill was hired as deputy general counsel under Education Sec. Miguel Cardona.
Merrill founded the Project of Predatory Student Lending at the Legal Services Center of Harvard Law School in 2012. The Project represents low-income borrowers in predatory lending cases against for-profit schools, and to date has represented borrowers that resulted in almost $1 billion in student loan cancellation.
I’ve mentioned this Project in a previous article because they were also involved in representing other former ITT student loan borrowers with $3 billion in loans, who have yet to receive cancellation.
Senator Elizabeth Warren has used Merrill’s research saying that the president can legally cancel $50,000 in student debt. And this has been the primary agenda we’ve seen and heard from a lot of Democratic senators and representatives.
It’s time for President Biden to #CancelStudentDebt. People need this. Our country needs this. And one of the best ways to create a 21st-century economy is by investing in people who have invested in their own education.
— Elizabeth Warren (@ewarren) June 25, 2021
Warren wrote on Twitter, “It’s time for President Biden to #CancelStudentDebt. People need this. Our country needs this. And one of the best ways to create a 21st-century economy is by investing in people who have invested in their own education.”