The looming decision to freeze student loans worries borrowers

PResident Biden’s student loan repayment pause is set to end in less than two weeks, but borrowers are wondering if the pause will be extended for a seventh time. The hiatus, which first went into effect in March 2020, should end on August 31st. Although there is evidence that the pause will see another extension, this is the nearest end date of the break without being extended again. Many borrowers feel ill-prepared at the prospect of resuming payments on such short notice.

“I don’t think if I had to pay my student loans I would be able to eat. I work, not just paycheck to paycheck, but I borrow money and use credit to pay for my basic survival needs,” Victoria Lowe, who attended several different colleges in Virginia, told TIME. “I haven’t fully realized the fact that this is something I’m going to have to start paying for. I have been working minimum wage for the past few years.

Read more: What we know so far about President Biden’s plan for student loan forgiveness

In June, US Secretary of Education Miguel Cardona said borrowers would receive “sufficient notice” of any decisions about loan payments. In July, Biden said he would share his decision on whether or not to extend the hiatus by the end of August.

“My rent just went up, but I got a new job, so I was really hoping that since I got a raise, I could start paying off all that debt, actually saving money and working to improve my finances” , says Lowe. “But if I have an extra few hundred dollars in payments coming in every month, all those goals and intentions that I have are going to fly out the window.”

Student loan payment pause initiative through COVID-19 Emergency Assistance and Federal Student Aid, started under the Trump administration to ease the financial burden at the start of the pandemic. The moratorium halted payments on federal student loans serviced by the Department of Education, allowed 0% interest to be charged on the loans, and halted the collection of delinquent loans.

“The student loan deferment program allowed me to explore more career fields after graduating with a degree in a field where it is difficult to secure a well-paying job,” Emily Archer, Health Studies and Nutrition, University of Massachusetts Amherst Program Without Walls (UWW), says TIME.

UWW is designed to help non-traditional students complete their degrees. The program allowed Archer to save money by working and taking classes online at the same time. Archer hopes to work in public health and currently has a job with an AmeriCorps program that is helping her pay off her loans. Archer shared that she owes about $15,000 in loans and that her AmeriCorps education award is $4,500.

“I really think student loans and paying for college were a major factor in my decision to find an Americorp program that would work with my degree,” says Archer. “The downside is that these programs pay very little in terms of stipends, but at least I’ll be able to work to improve local communities.”

The student loan repayment pause was introduced under the CARES Act, which requires loan servicers to give borrowers a minimum of six notices starting at least two months before payments resume. At the beginning of August The Department of Education has notified credit service providers not to send these notices, The Wall Street Journal reports, indicating that payments likely won’t start anytime soon.

The president now faces pressure from both Democratic lawmakers and voters to extend the pause and expand other student loan forgiveness measures. Some have speculated that Biden’s student loan policies — or lack thereof — could play a role in the upcoming election.

Since Biden took office, he has written off $32 billion in student loans. This relief focuses primarily on borrowers who attended schools that misled students about financial information, borrowers with disabilities and those enrolled in the Public Service Loan Forgiveness Program.

Republicans and Democrats remain divided over student loan freezes and forgiveness amid rising inflation and a possible recession. Biden supported canceling $10,000 per borrower in federal student loans during his presidential campaign, but rejected canceling $50,000 per borrower, a figure some Democrats had pushed for.

Higher education expert Mark Kantrowitz previously told TIME that if Biden chose to resume student loan payments just months before an election, it would be “political suicide.” “Political considerations aside, there is no valid rationale for further extending the payment and interest-free pause,” Kantrowitz said.

Read more: How the student debt complex is crushing the next generation of Americans

On August 18, the student loan servicer, Nelnet, sent an email to some of its borrowers saying that their payments would be automatically debited on September 1. It’s unclear why that message was sent or how many people received it, but hours later Nelnet sent a follow-up email telling borrowers to disregard the message and that payments were on hold due to the pandemic.

“We emailed you earlier today that your student loan payment will be automatically withdrawn from your bank account on September 1, 2022.” Nelnet clarification email Read it. “Please ignore this email. It should not have been sent. We apologize for any confusion or concern this may have caused.”

The Nelnet emails highlight some of the confusion experienced by borrowers due to miscommunication and lack of information from credit administrations and service groups.

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