Rep. Virginia Foxx (R-Ill.) said on “The Evening Edit” that students will take on more debt in the future, thinking taxpayers will pay it back.
Student loan borrowers U.S. banks are taking their time to resume repayments after the last pandemic-related payment pause expired late last year.
Repayments for federal student loan borrowers were suspended from mid-March 2020, when the COVID pandemic began, and remain in effect until September 1, 2023, three and a half years after the payment suspension began.
According to Department of Education data, as of the end of March 2024, about 20 million borrowers had resumed their student loan payments, while about 19 million had not resumed their payments and their accounts were either delinquent, in default, or on hold due to deferment or forbearance, The New York Times reported.
Borrowers have until September to take advantage of what’s called an on-ramp, a system that allows them to postpone payments without them being reported to credit bureaus, though extra interest will continue to accrue to their accounts while the on-ramp is active.
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Some student loan borrowers are lobbying the Biden administration to forgive as much student loan debt as possible, even though courts have rejected parts of the president’s proposals. (Kent Nishimura/Los Angeles Times via Getty Images/Getty Images)
As of the end of March, 42.8 million federal student loan recipients owed a total of $1.62 trillion, according to the data.
The number of recipients fell to the lowest level since the third quarter of 2022 as President Biden moves forward with a student loan grant plan aimed at canceling or reducing borrowers’ outstanding balances.
Biden’s student loan debt forgiveness plan has been repeatedly rejected or put on hold by federal courts, and the administration is exploring ways to address the issue that could be legally accepted.
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President Biden has announced several initiatives, including student loan debt forgiveness and relief for borrowers, some of which have been blocked by the courts. (Kyle Mazza/Anadolu via Getty Images/Getty Images)
The Biden administration’s new Income-Contributed Repayment (IDR) program, known as the Savings for a Valuable Education (SAVE) Plan, is the latest program to encounter legal headwinds.
Last week, a federal court in Missouri Blocking the Biden Administration Allowing additional forgiveness for borrowers under the SAVE Plan.
a Federal Judge The Kansas Supreme Court also ruled last week that the SAVE Plan was illegal, but that decision was put on hold by a federal appeals court on Tuesday, allowing the Department of Education to continue cutting payments under the plan.
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Nearly half of student loan borrowers have not resumed payments since the pause ended. (Kent Nishimura/Los Angeles Times via Getty Images/Getty Images)
The SAVE Plan, announced in 2023, amends and replaces the previous IDR Plan, known as the REPAYE Plan. Under the SAVE Plan, borrowers’ monthly payments are calculated based on income and the number of people in their family. Nearly all borrowers will see payment reductions, while borrowers who initially took out loans of $12,000 or less will be granted forgiveness after 10 years.
The provision also includes an interest concession for borrowers who pay their monthly payments in full but the amount is not enough to cover the monthly interest. The federal government will pay the remainder of the month’s interest under the plan. In effect, this provision prevents the balance from increasing due to unpaid interest.
