Many people have been financially struggling as a result of COVID-19, including students across the United States. President Biden has placed a freeze on student loan payments, that was supposed to expire at the end of September. However, the Education Department said those benefits will now continue until January 31, as a “final” extension to alleviate financial burdens for students and borrowers during the pandemic. This extension was crafted to buy the Biden administration more time on what repayment plans will look like after this freeze is lifted.
If you are a student facing financial challenges and worry about your repayment plan approaching, contact a knowledgeable New York bankruptcy attorney to guide you through your options. We are here for you. Contact our firm to schedule a free consultation.
What is the purpose of the student loan payment pause?
The payment pause was enacted to take the stress off of students, allowing them to focus on their families, health, and finances instead of student loans during the national emergency. The extension will give students and borrowers the time they need to plan their repayment as the nation’s economy continues to recover.
The Education Department estimates that the zero-percent interest on most federal student loans will save borrowers a collective $5 billion each month. However, the department has also determined that the freeze on student loan payments and interest has increased the cost of the federal student loan program by about $76 billion. The federal government has paused monthly loan payments and all interest since March 2020 through various legislation plans including the CARES Act and other executive actions from both the Trump and Biden administrations.
Is this payment pause really enough?
Senate Majority Leader Chuck Schumer, Sen. Elizabeth Warren, and Rep. Ayanna Pressley have released statements indicating that the student loan system remains broken, exacerbating racial wealth gaps and holding back the economy. Schumer has since been leading lobbying efforts to get the Biden administration to cancel up to $50,000 of debt per borrower.
Many department officials have expressed their concern with student loan companies, and are worried that the short time frame of resuming payments to borrowers would lead to a chaotic transition, especially given the fact that student loan payments will resume for tens of millions of borrowers at once.
If you are struggling financially, speaking with a bankruptcy attorney may be the best option for you. Contact our firm to speak with an experienced bankruptcy attorney. We are here to advocate for you and help you get back on your feet.
CONTACT A BANKRUPTCY LAWYER TO DISCUSS YOUR DEBT OR COLLECTION ISSUE
Michael D. Pinsky, P.C. represents clients in bankruptcy actions and related matters. Please call 845-394-2616 or contact the firm online to schedule a consultation.