Trump should extend freeze on student loan repayments

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In March, Congress temporarily froze federal student loan payments, providing much-needed financial relief for millions of borrowers until the end of September. President Trump extended the freeze until December 31 by executive order. Now, with little hope for another back-up plan from Congress before the next administration takes matters into its own hands, Trump is expected to sign a new executive order to extend the freeze once again. Otherwise, large numbers of Americans and the student loan system as a whole will face chaotic challenges between New Year’s Day and January 20, when President-elect Joe Biden will be sworn in.

The pandemic has not spared college graduates or those with a few years of schooling under their belt. Student loan borrowers are among the millions of Americans who have lost their jobs. Families have struggled to pay their bills or rent, and experts expect an eviction crisis after the federal moratorium on evictions expires at the end of the year.

The so-called CARES law has helped ease some of that financial pressure through stimulus checks and improved unemployment insurance, but since Congress and the Trump administration have been unable to strike a deal on a new recovery plan. relief, much of the support the Americans received has faded or dried up altogether.

There are over 40 million student loan borrowers in the United States, and monthly student loan payments are typically between $ 200 and $ 400. Asking borrowers to start making those payments again when many of them are struggling with other bills will place an even greater burden on families across the country, potentially causing millions of people to default, racking up bank charges. penalty and face higher interest rates for the foreseeable future. . According to a recent survey, 58% of borrowers are not convinced that they will be able to repay their student loans after the freeze expires.

More people are employed now than they were at the start of the recession, but it’s not exactly a stable job market. The recent spike in positive coronavirus cases will likely force many more businesses to temporarily shut down again. Cambridge City Council, for example, is pushing for more aggressive restrictions on indoor dining. And in Michigan, the governor is imposing new restrictions that will shut down businesses like movie theaters, casinos and bowling alleys. But even in cities and states that don’t impose closures, people are less likely to eat in restaurants or frequent physical stores when there is a spike due to fears of infection, which could ultimately lead to more unemployment.

It is therefore all the more vital to stimulate consumer spending. And extending the freeze on student loans would help. If millions of Americans have several hundred dollars extra at the end of each month, they can patronize more businesses and purchase more goods and services.

If the Trump administration doesn’t act, it won’t just be a financial shock. Administrative challenges could also undermine the federal student loan system. As Scott Buchanan, executive director of the Student Loan Servicing Alliance, told Politico, the system “was not designed to start and stop at the same time for 30 million borrowers.” One of the Department of Education loan officers, for example, accidentally tampered with the credit reports of 5 million borrowers due to a coding error when the freeze was first implemented. CARES. And if the federal government hastily rekindles, the Office of Consumer Financial Protection’s Student Loans Ombudsman has warned administrators should be doing too much too quickly, which could botch their collection system by incorrectly billing or failing to keep people in a manageable fashion. payment plans. Any plan to resume these payments should allow time for service agents to properly contact borrowers well in advance of the lifting of the moratorium so that problems can be avoided.

With Congress obviously out of sight, millions of Americans depend on the Trump administration to make the right decision and extend the moratorium on student loan payments. Education Secretary Betsy DeVos should know by now that her department is unlikely to be ready to resume collecting these payments. She should urge the president to extend the deadline.

And as Trump braces for the end of his presidency, he could double down on the good deed of delaying debt payments and helping American families on the way home – if not out of compassion, at least to improve his legacy. By extending the freeze for just 20 days until the end of his term, he could easily save millions of borrowers from having to choose between groceries or paying off a student loan. This could be one of his last acts as president, or he may continue to wreak havoc that will end up making people sicker, poorer and hungrier. The choice – and the responsibility – is hers.


Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter at @GlobeOpinion.

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