Education Secretary Miguel Cardona urged patience as the administration tackles its next steps on student-loan debt relief, a signature initiative of President Joe Biden’s, saying officials were dealing with a system that is broken, Bloomberg News reported. “We are cleaning up a big mess,” Cardona said in an interview on Bloomberg Television with David Westin on Friday. “We’re improving the system so that we’re not in the situation where students are left with a lot of debt and low income.” Biden has taken unprecedented steps to help relieve student debt, but polls show some young voters believe his efforts have fallen short. “Let’s keep in mind this debt forgiveness work that that we’re doing is a result of not only the pandemic but we had over a million people going into default every year,” Cardona said. “We’re working on fixing a broken system." Cardona said about 60% of borrowers have resumed making payments — a figure that is down from pre-COVID levels of about 70%. A new survey shows signs loan servicers are being overwhelmed as borrowers begin to again make payments after a three-year pause due to the COVID-19 pandemic. After payments restarted in October, the average wait to speak to a representative went from 12 minutes in August to over 70 minutes in October, according to a survey released Friday by the Consumer Financial Protection Bureau.
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In related news, the Consumer Financial Protection Bureau (CFPB) published an issue spotlight on Friday on the CFPB’s oversight of student loan servicing practices in the early months of the resumption of federal student loan repayments after over three years of a payment pause due to the COVID-19 emergency. Borrowers are encountering long hold times when trying to reach their student loan servicer, experiencing significant delays in application processing times for income-driven repayment plans, and receiving inaccurate billing statements and disclosures. “The resumption of student loan payments means that borrowers are making billions of dollars of payments each month,” said CFPB Director Rohit Chopra. “If student loan companies are cutting corners or sidestepping the law, this can pose serious risks to individuals and the economy.” The CFPB has been closely monitoring student borrowers’ experiences during the return to repayment, using consumer complaints to identify emerging problems and using its supervisory authority to examine loan servicer conduct and performance.
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