While struggling borrowers could have 12 months to save up before resuming payments under the new plan, interest will still accrue on their debt during the proposed on-ramp period.
Americans who are facing serious hardship will see an even steeper balance once payments kick back in. Advocates for student loan relief are furious.
“There is already so much confusion,” said Natalia Abrams at Student Debt Crisis Center (SDCC), a nonprofit that advocates for student loan relief and assistance.
Progressive lawmakers, who pushed Biden to issue his ill-fated student loan forgiveness plan, are also urging the Biden administration to change course.
“People should not be incurring interest during this 12-month on-ramp period. So, I highly urge the administration to consider suspending those interest payments,” Rep. Alexandria Ocasio-Cortez (D-N.Y.) said.
The White House insists that it must follow the Supreme Court’s ruling and a provision in the debt ceiling deal Biden signed last month that formally ends the national pause on student loan payments and interest accrual.
Federally held student loans have essentially been frozen since former President Trump issued an executive order suspending payments and interest accrual in March 2020.
The Biden administration extended the student loan pause several times, but agreed to end it during debt ceiling talks with Republicans.
“The law requires us to end the payment pause this summer. We believe in the rule of law, and plan to follow it,” a White House official told The Hill.
Borrowers are set to start repaying their student loans in October after interest begins accruing again in September.
The president said that the on-ramp program would at least help alleviate some pressure on borrowers by not having their debt sent to collectors or credit scores impacted from October 2023 to September 2024.
The Hill’s Lexi Lonas and Alex Gangitano break it down here.
