In response to court rulings earlier this week that blocked key components of a student loan policy, the Biden administration is planning to place about 3 million student loan borrowers into a monthslong payment pause.
In particular, the rulings halted the Department of Education from cutting borrowers' payments beginning July 1, when they were set to decrease from 10% of a borrowers' discretionary income down to 5% for those with undergraduate loans, and from canceling any more loans for people who'd taken out small initial loan balances but had been paying them down for over a decade. So far, 414,000 people have qualified for such debt relief.
The process of reverting back to charging borrowers 10% of their income will take"at least several months," Boynton argued, because it took months of preparation to get ready for the new payment calculation. During that time,"the Department will have no choice but to place a large number of SAVE borrowers into forbearance, until its servicers’ systems can service loans with a correct calculation of payments due.
Though the Monday court rulings dealt a blow to the plan, the Department of Education maintained that it still carried strong benefits for borrowers.
Biden's continued efforts to cancel debt in a more piecemeal fashion have now reached nearly 4.75 million borrowers, which he continues to highlight on the campaign trail in an attempt to gain support from a key voting group.
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