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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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The "National Guard and Reservists Debt Relief Extension Act of 2023" (H.R. 3315) was signed into law yesterday by President Biden after passing the Senate on Monday and the House of Representatives on Dec. 11. The bipartisan measure was reintroduced on May 15 by Rep. Steve Cohen (D-Tenn.) to provide the same means-test treatment under chapter 7 of the Bankruptcy Code for guard members and reservists who were recently federally deployed as that of active duty servicemembers. The legislation exempts for an additional four-year period, from the application of the means-test presumption of abuse under chapter 7, qualifying members of reserve components of the Armed Forces and members of the National Guard who, after September 11, 2001, are called to active duty or to perform a homeland defense activity for not less than 90 days.

Just over half of the millions of borrowers who received their first federal student loan bills in years in October — after the pandemic freeze ended — have paid the bills, the Education Department said on Friday, the New York Times reported. Forty-three million borrowers collectively owe the government $1.6 trillion in student loan debt. In March 2020, as the coronavirus pandemic roiled the nation’s economy, President Donald J. Trump’s administration imposed a freeze on collections as an emergency relief measure. The moratorium was extended nine times by Congress, Mr. Trump and his successor, President Biden — until this fall, when it finally ended. Officials had long warned that getting borrowers accustomed to paying again after such a long break would be a rocky process, especially after the Supreme Court in June overturned Mr. Biden’s $400 billion plan to forgive up to $20,000 in debt per borrower. Tens of millions of people would have benefited from that relief. Instead, 22 million people had to make their first payment in years in October as the government restarted its collection machinery. Sixty percent of them paid the bill by mid-November, according to James Kvaal, the Education Department’s under secretary. (Borrowers who are still in school or recently left do not yet owe on their debts. Also, some borrowers’ payment deadlines were extended because of loan servicing errors.) That leaves nearly nine million borrowers who had payments due but have not yet made them. Many people “will need more time,” Mr. Kvaal said Friday in a written statement. “Some are confused or overwhelmed about their options.”

The Biden administration discharged another $4.8 billion in student loan debt for more than 80,000 borrowers, the Education Department announced yesterday, YahooFinance.com reported. That brings the total amount discharged since President Joe Biden took office to $132 billion for more than 3.6 million borrowers. The latest discharges include $2.6 billion for 34,400 borrowers using the public service loan forgiveness (PSLF) program and waiver and $2.2 billion for 46,000 borrowers under the one-time payment adjustment for income-driven repayment plans. Around 750,000 borrowers have received $53.5 billion in relief from the PSLF program, which includes the limited PSLF waiver that ended last October. Only about 7,000 borrowers had received forgiveness through these programs when the president took office. Teachers, nurses, doctors, lawyers, and other professionals who work in public service jobs with federal, state, local, or certain non-profit organizations are eligible to have their remaining loan balances discharged after 10 years of payments through the PSLF program. PSLF is also available for military service members who don’t qualify for other military loan forgiveness programs. The number of PSLF borrowers who got a discharge increased because of settlement of a lawsuit brought by the American Federation of Teachers (AFT) that offered a PSLF waiver allowing those denied loan forgiveness to reapply by last October.