Borrowers who did not get statements within the required 21 days before payment will be placed in administrative forbearance while problems are resolved.
WASHINGTON (AP) — The Biden administration is docking more than $2 million in payments to student loan servicers that failed to send billing statements on time after the end of a coronavirus pandemic payment freeze.
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More than 22 million borrowers started getting bills again in October after a moratorium that froze payments and interest for more than three years. Bringing that many borrowers online at the same time was an unprecedented task that overwhelmed servicers hired by the government. Many borrowers received bungled bills only to face hours-long wait times for customer service.
To ease borrowers back, the Education Department is offering a one-year “on-ramp” that waives the harshest penalties for borrowers who miss payments. Until next September, borrowers won’t be found to be delinquent for missing payments and they won’t be subject to debt collection.
Early figures from the Biden administration found that 60% of borrowers with payments due in October had made those payments by mid-November.
Even as payments restart, the administration is working toward a new proposal for widespread student loan cancellation after the Supreme Court rejected Biden’s first plan last June.
The new plan has yet to be finalized but the department hopes to provide targeted relief to certain groups of borrowers, including those with loans taken out more than 25 years ago, those with snowballing interest, and borrowers whose colleges leave graduates with high levels of debt compared to their earnings.
The new proposal is going through a process known as negotiated rulemaking. A final proposal is expected in coming months, although opponents are almost certain to challenge the cancellation in court.
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