Democratic Senators Urge Biden To Extend Suspension Of Student Loan Payments And Other Current Student Loan News For The Week Of July 19, 2021

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Last week, a group of Democratic senators sent a letter to President Biden requesting that the suspension of federal student loan payments be extended until at least March 2022. In addition, South Carolina State University has waived more than $9 million in institutional student loans for eligible upcoming students. Here’s what you need to know about this week’s student loan news.

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a woman with a book: Woman stands in a university library


© Photo by Adobe Stock, Illustration by Bankrate
Woman standing in a university library

2 current trends within student grants for the week of July 19, 2021

1. Democratic Senators Call on Biden to Extend Pause on Student Loans

On July 13, Democratic Senate Elizabeth Warren and Edward J. Markey sent a letter to President Biden urging him to extend the current payment and interest pause on federal student loans until at least March 31, 2022. This push comes after an investigation to federal plans from student loan managers for navigating the current end of the grace period on September 30.

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“The resumption of payments is currently scheduled to begin on October 1, 2021, but the information we have received in our investigation strongly supports an extension of the pause on student loan and interest payments,” the letter reads. “The responses to our survey indicate that neither student loan borrowers nor student loan service providers are prepared to resume payments.”

The letter lists multiple hurdles to restarting the refund on October 1. Not only have borrowers been out of touch with their service providers during the pandemic payment hiatus, but the service providers themselves will need more staff to support such a major transition. FedLoan Servicing also recently announced that it will not renew its contract with the US Department of Education, and transferring all of FedLoan’s existing loans to other service providers will add additional pressure.

How this affects student loans

The administration has not yet announced an extension of the grace period, and as of now, it will expire on September 30, 2021. Borrowers must prepare to start making the regularly scheduled payments or to watch alternative or means-tested repayment options If necessary.

Video: Democrats Worry About Student Loan Collection as Payment Resurfaces (Yahoo! Finance)

If there is an extension, it is possible that borrowers can get a few more months of relief. Regardless of the timing, borrowers will hear from their service providers before payments resume.

2. South Carolina State University forgives $9.8 million in student loans

South Carolina State University announced on July 17 that nearly $10 million in institutional student loans will be waived for students financially affected by the COVID-19 pandemic. Alexander Conyers, in his first executive decision as acting president of the university, said in his statement: “No student should sit at home because they cannot afford to pay their delinquent debt after experiencing the financial devastation that has been caused by a global pandemic.”

The university is using COVID-19 relief funds granted to it by the federal government through the CARES Act and the U.S. bailout plan to forgive more than 2,500 students. Most of these students were previously enrolled, but were unable to continue their education due to overdue balances. The forgiven debt is loans taken out through the university, not through the federal government or private lenders.

How this affects student loans

South Carolina State University is one of several colleges that have used CARES Act and American Rescue Plan funds to help get rid of their students’ institutional debt. Some of the pandemic funding for universities was intended to help students in difficulty, meaning more students could receive financial aid in the coming months.

Next steps

Whether you have just started taking out student loans or are already well advanced, it is wise to stay informed about how your student finance is progressing student loan rates can change. As 2021 progresses, more opportunities may arise for cheaper loans or loan forgiveness; keep an eye on it Student Loan Bank Rate News Hub for the latest trends.

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