COLORADO SPRINGS — More than 200 organizations, including some in Colorado, are pushing for an extension to the student loan pause.
The coalition sent an open letter to the Biden Administration Wednesday that argues the pause shouldn't be lifted as millions across the nation continue to struggle during the COVID-19 pandemic.
Former President Donald Trump and President Joe Biden both extended the moratorium, but it's set to expire on January 31.
In less than 60 days, student loans will restart for millions of borrowers, but some hope for more relief.
"COVID-19 has impacted a lot of people's jobs and a lot of people's incomes," said Tamar Crump, a Junior at Colorado College.
For Crump, the pause made the biggest difference in her life.
"It definitely helped my mother, who did take out a lot of loans to get her degree, and she's still paying them off," said Crump. "She was able to assist me with paying my portion so I could decrease the amount of loans I took this year."
During the pause, she says her family was able to use the extra funds toward housing and food.
"People are just now starting to get back on their feet, and I'm sure there are other bills people are behind on," said Crump.
Young Invincibles, a non-profit organization committed to expanding economic opportunity for young adults, joined the coalition to help people struggling during the pandemic. The organization is among those in Colorado that took part in the letter.
"This letter came to be because for the last 21 months we've all been experiencing this collective tragedy of the pandemic," said Ernest Ezeugo, Policy and Advocacy Director for Higher Education and Workforce, Young Invincibles.
Ezeugo says there are a variety of reasons why the student loan pause shouldn't be lifted.
"People have not been paying student loans for almost two years now. We have people who graduated in the midst of the pandemic and have gone through their grace period for the loans and who are not a part of the system and haven't experienced paying loans. We have people who've benefited greatly from not paying loans over the past couple of years. That's already a complicated piece, asking people to start this process back up, some of whom have ever done so or have benefited from it," said Ezeugo. "Then over the course of seven months, we've heard from a number of servicers, that have said they don't plan to renew their contract with the Department of Education to continue servicing loans."
He says that is just one of many problems that shows the pause should continue.
"We first heard of the Delta variant, which kinda upended our beliefs about how far we had to go until the end of the pandemic. It had a significant impact on the economy as people realized we probably have to repeat some of the things we did the first time around. Now we're hearing about a new variant, and we don't know the impact it's going to have on the economy as well.
Within the letter, the coalition says the following are a few examples of why the student loan system doesn't meet the needs of borrowers.
- The National Consumer Law Center received data through FOIA showing that, as of January 2021, only 32 borrowers had successfully navigated the IDR repayment plans and received a cancellation, out of more than 4 million with decades-old debts.
- The Education Department acknowledged a backlog of 175,000 applications for Public Service Loan Forgiveness—borrowers who may be forced to pay a student loan bill as they remain stuck in the government’s red tape. The recent announcement of the limited and temporary PSLF waiver does offer a new path to relief for some borrowers, but inconsistent servicer implementation of the new rules threatens its promise.
- The Education Department also acknowledged a backlog of more than 128,000 applications for Borrower Defense discharges—the number of unprocessed claims for debt relief due to fraud by a school have climbed by more than 20,000 during the first months of the Biden administration.
Colorado College Director of Financial Aid and Student Employment Shannon Amundson says borrowers shouldn't expect another pause.
"The reality is that we have an administration and Congress that are trying to do things, but we've all seen it's not quick and it's not painless. I don't see an executive order for another pause happening that way. We've seen based on the other legislation that Congress is ineffective at best and not very productive at worse. I don't anticipate they're going to get to that point and the Biden Administration has been very clear that they don't believe in an executive order to cancel student loan debt," said Amundson. "As much as we'd like to petition and say the administration needs to do something, Congress is the one that's been told to do it and they're not."
Amundson says Congress would have to use the budget process to make any changes.
"They just raised the debt ceiling because they can't manage a budget so I'm not very hopeful that it will come down the pipe before January 31," said Amundson.
She encourages borrowers to not rely on another pause, and start preparing for the extension to end.
"Anyone in repayment or will be hitting repayment, get in touch with your servicer, make sure you've set up your online account, and make sure you know who that servicer is. In addition to the pause, for some people, there are some servicers getting out of the business so they may be switching servicers so really knowing what that looks like and getting into the account you have now or setting it up. They will send you electronic messages saying that we are selling or moving your account," said Amundson.
Amundson says many servicers are checking with borrowers to make sure autopay is set up because they may have been set up before but their bank account information may have changed.
"If you wait 15 days before that first payment, it's usually too late for them to change their bank file so you don't want to wait. Do it right away, either change your bank or take it off auto payment. Whatever you need to do to be ready for that payment to start," said Amundson. "The payment plans are something that you'll want to work closely with your servicer because every one of them is going to be different."
For those borrowers who aren't ready to make payments, Amundson says to get the servicer of the loans to figure out a plan.
"You just need to go ahead and talk to them about if you need to do a forbearance or deferment because you are unemployed so you have those options," said Amundson.
She says there are several talks going on at both the state and federal levels to address student loans. Colorado College is pushing to get the Pell grant doubled for future students.