“The Department must not squander this opportunity to fix the broken student loan system. “There is much more work to be done to secure additional relief and cancel student debt - we will continue to echo the voices of our supporters until we get it done,” said Cody Hounanian, SDCC Executive Director. The relief announced today “is important to borrowers struggling to shoulder the harm caused by the pandemic, economic shocks, and inflation,” said Student Debt Crisis Center’s (SDCC) President Natalia Abrams in a statement.īut advocates called on Biden to go much further in the coming months, including enacting broad student loan forgiveness. “We applaud the Biden Administration’s decision to pull millions of borrowers out of default and to give them a fresh start.” “For too long, defaulted borrowers have slipped through the cracks and been made to suffer at the hands of the Department of Education's punitive collection system, which forces them to forgo their wages, social security benefits, and Earned Income Tax Credits in retaliation for defaulting on their federal loans,” said Student Borrower Protection Center (SBPC) Policy Director Persis Yu in a statement. Advocates Praise Biden’s Action But Call For More Robust Relief, Including Student Loan Forgiveness Officials have not yet released concrete details or a timeline for its new “fresh start” program, but it could benefit up to nine million borrowers. The Biden administration’s actions will allow the Education Department to automatically remove borrowers from default and restore their accounts to good standing. Since collections efforts had been suspended under the CARES Act, this information was rarely communicated to borrowers, leaving millions stuck in default. Instead, the Department still required borrowers to affirmatively apply for the rehabilitation program and enroll by submitting specific paperwork. But while the relief allowed the months of suspended payments to count towards loan “rehabilitation” - a federal loan program that allows borrowers to cure federal defaults and restore their loans to good standing after at least nine months of payments - the Education Department did not automatically rehabilitate borrowers. The CARES Act - the legislation that first enacted the student loan pause - had suspended all collections efforts against borrowers in default on their federal loans.
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