Are student loan servicers ready for you to make student loan payments starting October 1?
Here’s what you need to know.
If the question is whether your student loan servicer is ready for you to make student loan payments starting October 1, the answer is it depends who you ask. If you ask Sen. Elizabeth Warren, the answer is a resounding “no.” Warren, along with Sen. Edward Markey (D-MA) and Sen. Tina Smith (D-MA), asked several leading student loan servicers detailed questions about student loans and student loan repayment during the Covid-19 pandemic. The senators sent letters to the student loan services, asking them, among other questions, whether they are ready for student loan payments to resume. The student loan servicers each responded in writing.
Elizabeth Warren: Student loan servicers aren’t prepared for student loan repayment
Apparently, the senators concluded that based on the responses from the student loan servicers that they’re not ready for student loan payments to resume. This follows a recent report that said student loan servicers failed student loan borrowers during the Covid-19 pandemic. As a result, Warren — a staunch defender of student loan cancellation and student loan borrower rights — and her colleagues say President Joe Biden must extend temporary student loan relief, which is scheduled to expire on September 30, 2021, to at least March 31, 2022. In a letter to Biden, the senators wrote:
“The responses to our inquiry indicate that neither student loan borrowers nor student loan servicers are prepared for payments to resume, and servicers will need significant time to ensure that staffing and procedures are ready to provide borrowers with a high level of support,” the senators wrote. “We received responses from each of the servicers, and…[t]hese responses overwhelmingly indicate that more time is needed to ensure that borrowers are supported when reentering payment on their student loans.”
Student loan payments are due starting October 1 — Here’s what student loan servicers said
In their written responses to the three senators, most student loan servicers answered the senators’ questions directly. They highlighted their track record, commitment to student loan borrowers, ongoing training and preparation, and other efforts to make a smooth transition starting October 1, 2021. While some student loan servicers said they planned to hire additional staff when student loan payments resume, most implied they could handle student loan payments when they restart. The bigger issue is not whether the servicers are prepared; they said it’s the uncertainty from the Biden administration about whether student loan relief will be extended. With less than 90 days until this studen loan relief expires, student loan servicers imply they’re in limbo until the Education Departments communicates with them and student loan borrowers about the start date.
Interesting point: several student loan servicers responded that student loan borrowers successfully paid all their student loans during the Covid-19 pandemic. (This student loan repayment could be in the normal course combined with student loan borrowers taking advantage of no student loan interest accrual during the Covid-19 pandemic). For example:
- Edfinancial: 57,711
- FedLoan: 1,785,367
- Granite State: 105,887
- MOHELA: 476,342
- Navient: did not answer
- Nelnet: did not answer
- OSLA: 73,552
Biden could extend student loan relief beyond September 30
Will Biden extend student loan relief beyond September 30? While Biden already extended this student loan relief for eight months, it’s possible that Biden could extend student loan relief even if unemployment benefits and the eviction moratorium end. A recent survey found that 90% of student loan borrowers aren’t ready to pay student loans starting October 1. The term “ready” could have different meanings, including “can’t afford student loan student loan payments” or “not psychology ready,” for eample. That said, there have been multiple proposals to extend student loan relief until 2022, including to whenever pre- Covid-19 pandemic employment levels are restored. Ultimately, Biden will make the decision whether to extend student loan relief. This also comes at a time when Biden has cancelled more than $40 billion of student loans. Giving student loan borrowers more time could limit the amount of student loan default and student loan delinquency. However, there is another dilemma: Biden is championing an economic recovery from the Covid-19 pandemic. Additional student loan relief to help millions of struggling student loan borrowers could be viewed as antithetical to a recovering economy.
If you’re paying off student loans, any extension of student loan relief shouldn’t impact your overall game plan. Eventually, student loans will be due, so make sure you’re prepared with a strategy. Start making plans today to pay off student loans. Here are some popular options: