When student loan repayments start up again in a few months, borrowers should be ready to wait, maybe for a very long time.
The Department of Education has lowered the income loan servicers earn for serving each borrower and the minimum number of hours customer service centers must be open each week.
Supreme Court Decides Student Loan Repayment Plan
The Biden administration’s attempt to waive $400 billion in unpaid student loan debt through administrative fiat has drawn justifiable criticism, and the Supreme Court will now decide whether to uphold the decision.
Yet, a similarly illegal companion distribution has so far mostly avoided any issue.
The administrative suspension of monthly payment responsibilities and the accrual of interest on all outstanding student loans from the start of the COVID-19 pandemic is that giveaway, which started under the Trump administration and has persisted ever since.
At recent Supreme Court arguments, Solicitor General Elizabeth Prelogar emphasized this giveaway time and time again to support the bigger debt forgiveness scheme, which has cost taxpayers $150 billion.
Preloger asserts that the Department of Education’s continued use of the HEROES Act to halt student loan repayment and interest accrual since March 2020 is proof that the act also permits the cancellation of large amounts of debt.
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Why the HEROES Act is a Misguided Justification
Nevertheless, the history of the continued suspension of payments and interest is far more nuanced, and when properly analyzed, it offers no evidence to justify the administration’s reliance on the HEROES Act.
In reality, the so-called HEROES Act explanation didn’t come to light until months after the suspension had already been implemented, as part of the Education Department’s constantly shifting search for any conceivable legal justification to maintain the suspension without congressional approval.
To begin with, as part of the CARES Act, which was passed in March 2020, it was Congress, not the Department of Education, that first halted repayment requirements and eliminated interest accrual.
The conclusion of the fiscal year, on September 30, 2020, was specified by Congress as the termination date for this relief.
The suspension was, however, unilaterally extended to December 2020 by then-President Trump, who disregarded Congress as the deadline drew near.
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