“If we don’t extend the pause on payments, then that horrendous interest will pile up at a time when too many are still not financially prepared to shoulder a giant monthly bill,” he said. “Moreover, with omicron spreading, the uncertainty with what happens next demands at least one more extension of the student loan payment pause.”
He referred to a survey last month by the Student Debt Crisis Center, an advocacy organization, and Savi, a startup that helps borrowers reduce their payments. The groups found that while most borrowers are fully employed, 89% say they aren’t financially secure enough to resume payments. Forty-five percent said their current financial wellness is poor or very poor, compared to 25% before the pandemic.
A White House official who was granted anonymity to discuss the matter said the administration wanted an orderly return to loan repayment and would help borrowers make the adjustment.
Biden has resisted proposals to forgive student loans entirely. Warren, one of the foremost champions of the idea, and three other Democratic senators last week sent a letter to four federal loan servicers asking the companies to outline steps they’re taking to transition millions of borrowers back into payments once the moratorium ends Jan. 31.
Half of borrowers’ loans will be “transferring to a new loan servicer, an unprecedented event with a heightened risk of borrower harm,” the senators wrote.
--With assistance from Kaustuv Basu.
This article was provided by Bloomberg News.