The pandemic-era forbearance on federal student loans saved U.S. borrowers $37.8 billion in interest payments through 2021, according to data released yesterday by the Bureau of Economic Analysis, Bloomberg News reported. Payments were frozen in March 2020 as part of an unprecedented package of COVID-19 measures, providing relief to about 43 million of Americans who owed an estimated $1.6 trillion in student debt as of the end of last year. The BEA estimate focuses on interest payments. Borrowers have had the option to continue making payments — in which case they were applied to the principal. Others have spent, invested or used the funds to pay down other debts like credit cards. Student-debt payments are due to resume May 1, after several extensions of the freeze. Read more.
In related news, a group of Democrats sent a letter to Secretary of Education Miguel Cardona this week pressing for further information about how the administration plans to resume federal student loan payments and ensure borrowers receive adequate support, The Hill reported. Sen. Elizabeth Warren (D-Mass) and Reps. Lauren Underwood (D-Ill.) and Colin Allred (D-Tex.) led their colleagues in a letter to Cardona on Wednesday, seeking “additional detail on the scheduled resumption of federal student loan payments following the expiration of the payment pause on May 1, 2022.” In their letter to Cardona this week, the lawmakers wrote that, while they “appreciate the Biden administration’s actions to extend the payment pause,” they are concerned that “with less than 70 days until the scheduled expiration, borrowers may lack clarity about the timeline associated with the resumption of payments.” Read more.
