White House Declares It’s Time to Pay Up Your Student Loans. Are You Ready?
President Joe Biden announced in August that the “last” extension of the temporary freeze on student-loan payments would be extended to the end of the month of January. This appears to be the current strategy, and the Omicron variation appears to be the only item that could alter it.
During a press briefing last week, White House Press Secretary Jen Psaki responded to a question about the possibility of extending the payment suspension for an additional period of time.
She stated that the government will reveal additional specifics in the coming weeks on how it wants to move millions of borrowers back into repayments and that the administration is “making a variety of preparations” for this.
In Psaki’s words, “we’re still evaluating the impact of the Omicron variation.” “The government, on the other hand, places great value on a smooth transition back into repayment.
We are already in contact with borrowers to assist them in preparing for the return to repayment on February 1st, and they have acquired contract extensions with loan servicers to make this possible.”
The Education Department said the same thing to Politico last week in regards to a possible extension of the current school year and did not respond to Insider’s request for a statement.
It is yet uncertain how, or even if, the Omicron variant will have an impact on the recovery of the economy. New data from South Africa and Europe, however, suggest that COVID-19 cases in the United States, are expected to increase in the near future, with a senior Biden administration official telling Axios that “a major wave is on its way.”
“It will be completed quickly,” the source stated. “It won’t be as terrible, but there will be a significant number of hospitalizations,” says the expert.
Despite this, 43 million federal borrowers are still waiting for further information on the student loan repayment program that will resume in 49 days.
Some members of Congress have argued that more information on Omicron isn’t necessary and that President Joe Biden should extend the pause for the time being.
As Senate Majority Leader Chuck Schumer put it last week, “This debt is simply overwhelming for individuals.” “If we don’t extend the moratorium, interest rates will continue to rise. Students owe a large sum of money. Moreover, with Omicron in the picture, we’re not getting out of this situation as quickly as we’d want.”
Some of his Democratic colleagues are of the same opinion. A letter from Schumer, along with Massachusetts Senator Elizabeth Warren and Representative Ayanna Pressley, urging Biden to extend the moratorium, citing data from the Roosevelt Institute that found that restarting payments would strip $85 billion from 18 million borrowers over the next year if the moratorium is not extended.
A number of debtors have also spoken with Insider, who have heard their anxieties about approaching student-loan bills that are due in less than two months.
The forthcoming student loan installments have caused Melissa Andretta, a 53-year-old borrower with $163,000 in student debt, to have “more anxiety than I’ve had in years,” according to her latest statement.
However, despite criticism from politicians and campaigners, the Biden administration has made it clear that borrowers should be ready to continue paying off their school debt next year.