Democrats Demand Details on Resumption of Student Loan Payments

• Student loan repayments are set to resume May 1.
• However, questions persist regarding defaulted borrowers and involuntary collection.
• Federal lawmakers are also seeking clarification regarding the timing of payments.

Congressional Democrats are demanding additional details about the Biden administration's plans to restart federal student loan payments in May.

In a letter sent Wednesday to Department of Education Secretary Miguel Cardona, a bicameral group of Democrats led by Sen. Elizabeth Warren requested responses to a list of concerns.

Federal student loan payments have been frozen since March 2020 due to the COVID-19 pandemic. They are set to resume May 1.

In the letter, congressional Democrats expressed concern that with fewer than 70 days until the loan freeze ends, borrowers still lack clarity about the timeline for the resumption of payments.

"Providing this detail is critical to ensure that borrowers are adequately informed about the restart and that borrower harm is minimized during the transition," the letter stated.

Democratic lawmakers asked Cardona to answer the following questions by March 10:

• When is the first date that student loan payments are due, and will all borrowers have the same payment due date?
• Given the safety net period, when will borrowers who do not make payments on May 1 become delinquent, be charged late fees, have negative credit reports triggered, and be placed in default status?
• When will ED know how many borrowers become delinquent when payments resume, and will the department publicly release this information?
• Will borrowers who were in default before the payment pause have their loans rehabilitated before payments resume?
• If defaulted borrowers aren't rehabilitated, when will they begin to experience things like wage garnishment and other involuntary collections?
• What processes are in place to help keep borrowers out of delinquency?
• Given that ED does not have valid email addresses for millions of borrowers, how will it notify these borrowers of the end of the pause to protect them from delinquency?

Communication with borrowers about their loans is a vital issue for the Democrats who signed the letter.

According to a recent report from the Government Accountability Office, the Department of Education (ED) as of last December is missing valid email addresses for approximately 5.5 million borrowers. Likewise, the company that services loans for borrowers in default said it did not have email addresses for about 25% of those borrowers.

Additionally, the loan servicer Mohela told Warren last November that it mailed letters to borrowers without email addresses, 1.5% of which came back as undeliverable.

The grace period that will be extended to borrowers when payments resume is another issue for the group of Democrats. ED has promised that for the first 90 days after student loan payments resume, missed payments will not harm borrowers' credit scores.