Federal student loan repayments to restart, education secretary confirms
'We're preparing our borrowers to restart' federal student loan repayments, Education Secretary Miguel Cardona says
The Education Department is "preparing to restart" federal student loan debt repayments after a three-year pause now that the COVID-19 pandemic emergency has ended, Secretary Miguel Cardona told lawmakers this week.
Cardona revealed the administration's intentions at a Senate Appropriations Committee hearing on Thursday, when Sen. Katie Britt, R-Ala., asked him why the government should forgive student loan borrowers when President Biden is demanding that Congress pay its debt obligations in arguments with Republicans over the debt limit.
Britt, a first-term senator, cited remarks about the federal debt made Monday by White House press secretary Karine Jean-Pierre and asked if Cardona agreed.
"If you buy a car, you are expected to pay the monthly payments. If you buy a home, you are expected to pay the mortgage every month. That is the expectation," Jean-Pierre said.
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Cardona said he agreed with the White House. Britt then said, "that same logic must apply to student loans.
"We agree, and we're preparing to restart repayment because the emergency period is over, and we're preparing our borrowers to restart," Cardona responded.
He added that the HEROES Act, which the Biden administration has controversially argued empowers the secretary of education to reduce or eliminate federal student loan debt obligations, "provides me the opportunity to create a waiver for those who are impacted significantly by the pandemic — very similar to small businesses the year before, where Congress provided a little bit of support."
Cardona did not provide Congess with a specific timeline for the administration's plan when asked.
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Politico reported earlier this month that the Department of Education issued guidance to student loan companies last November about collecting federal student loan payments once payments resume sometime in October this year.
Student loan servicers are reportedly required to alert borrowers of payment resumption after Aug. 31.
Federal student loan payments were paused and interest rates reduced to 0% in March 2020, when President Donald Trump signed the CARES Act in response to the COVID-19 pandemic. The student loan pause has since been extended multiple times by the Biden administration.
Biden, who is running for re-election, has proposed forgiving up to $10,000 in federal student loan debt and up to $20,000 for those who received Pell Grants — a plan that is currently being challenged in court. If Biden is permitted to carry out his plan, he could eliminate a total of $441 billion in student debt from more than 40 million borrowers, according to the Federal Reserve Bank of New York.
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Federal student loan debt stands at $1.635 trillion and is carried by more than 43.8 million borrowers, according to EducationData.org. Should the Supreme Court give Biden the green light for relief, those eligible would need to have individual incomes of less than $125,000 or $250,000 if they’re married couples.
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The White House announced last November that federal student loan payments would resume 60 days after the Education Department is allowed to initiate its student loan forgiveness plan or after Supreme Court litigation is resolved – whichever comes first.
FOX Business' Javier Simon contributed to this report.