Congresswoman Virginia Foxx, Republican, says students will borrow more in the future because she believes taxpayers will pay it off in ‘The Evening Edit’.
Student Loan Borrowers In the US, they are taking their time resuming refunds after the latest pandemic-related pause expired late last year.
Beginning in mid-March 2020, when the COVID pandemic began, federal student loan repayments were suspended for borrowers. They remained in effect until September 1, 2023, 3½ years after the repayment freeze took effect.
Data from the Department of Education shows that as of the end of March of this year, nearly 20 million borrowers have started paying back their student loans, while about 19 million have not yet done so, leaving their accounts in a state of delinquency, default or otherwise suspended through forbearance or deferment, The New York Times reports.
Borrowers have until September to take advantage of a so-called on-ramp, which allows them to delay payments without the defaults being reported to the credit bureaus. However, their accounts will continue to accrue additional interest while the on-ramp is in effect.
BIDENS STUDENT DEBT HANDOUT PLAN COULD COST AS MUCH AS $1.4 TRILLION
Some students with student debt have lobbied the Biden administration to forgive as much student debt as possible, despite the courts rejecting some of the president’s proposals. (Kent Nishimura/Los Angeles Times via Getty Images / Getty Images)
The data shows that 42.8 million federal student loan recipients owed a total of $1.62 trillion at the end of March.
The number of student loan recipients fell to the lowest level since the third quarter of 2022, amid President Biden’s plans to disburse student loans and thus cancel or reduce borrowers’ outstanding balances.
Multiple versions of Biden’s plans to cancel student debt have been rejected or stalled by federal courts, prompting the administration to explore different ways to address the issue that may pass legal muster.
GEN X, BOOMERS AMONG MOST DEBT-BORROWER STUDENT LOAN BORROWER: REPORT
President Biden has announced several attempts to forgive student debt or otherwise provide relief to borrowers. Some of these efforts have been blocked in the courts. (Kyle Mazza/Anadolu via Getty Images / Getty Images)
The Biden administration’s new income-based repayment (IDR) program, known as the Savings on a Valuable Education (SAVE) Plan, was the latest version to face legal headwinds.
Last week, a federal court in Missouri the Biden administration was excluded of providing additional forgiveness to borrowers under the SAVE Plan.
a federal judge in Kansas also ruled last week that the SAVE plan was unlawful, though that ruling was stayed by a federal appeals court on Tuesday, allowing the Department of Education to continue reducing payments under the plan.
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Nearly half of students with student debt have not started paying it back since the end of the break. (Kent Nishimura/Los Angeles Times via Getty Images / Getty Images)
The SAVE Plan, announced in 2023, amended and replaced the previous IDR plan, the REPAYE Plan. Under the SAVE Plan, borrowers’ monthly payments are calculated based on their income and family size. It lowers payments for nearly all borrowers while providing forgiveness after 10 years for borrowers who originally took out $12,000 or less in loans.
It also includes an interest benefit for borrowers who make their full monthly payment, but the amount is not enough to cover their monthly accrued interest. The federal government pays the remainder of the accrued interest that month under the plan. So in effect, this provision prevents balances from growing due to unpaid interest.