Only 60 percent of those with payments due in October had managed to fulfill their obligations by mid-November.
Only 60 percent of those with payments due in October had managed to fulfill their obligations by mid-November.
Forty percent of borrowers in the United States have missed student loan commitments since repayments resumed on Oct. 1, according to the Department of Education.
James Kvaal, undersecretary of education, revealed that only 60 percent of those with payments due in October had managed to fulfill their obligations by mid-November, the Erudera reported.
Addressing the issue, he noted that out of the 22 million borrowers with payments due, over four million are facing debt for the first time.
Kvaal also acknowledged confusion and overwhelm among some borrowers about their options and emphasized the department’s commitment to supporting those transitioning back to repayment.
To alleviate the challenges, the Biden administration introduced an “on-ramp” repayment program, offering relief until October of the following year.
The initiative aims to shield borrowers from consequences like delinquency, default, and mandatory collections resulting from missed payments.
Ongoing efforts for debt relief
Earlier this month, the Biden-Harris Administration authorized an additional $4.8 billion in student loan debt relief for 80,300 borrowers, resulting from improvements to income-driven repayment forgiveness and Public Service Loan Forgiveness.
The announcement brings the total approved debt cancellation by the administration to nearly $132 billion for over 3.6 million Americans.
Likewise, Education Secretary Miguel Cardona highlighted the administration’s commitment to fixing the student loan system, emphasizing unprecedented debt relief.
“The data released today once again make clear that the Biden-Harris Administration’s relentless efforts to fix the broken student loan system are paying off in a big way, with more than 3.6 million borrowers now approved for nearly $132 billion in loan forgiveness,” he said. “This level of debt relief is unparalleled and we have no intention of slowing down.”
The approvals are categorized into $2.2 billion for IDR fixes benefiting 46,000 borrowers and $2.6 billion for 34,400 borrowers through PSLF. The Biden-Harris Administration has now approved almost $44 billion in IDR relief and $53.5 billion in PSLF relief since Oct. 2021.
Additionally, the administration has approved $11.7 billion for borrowers with total and permanent disabilities and $22.5 billion for those affected by school-related issues, such as closures or fraud.
The administration’s initiatives also include the introduction of the SAVE repayment plan, securing the largest increase in Pell Grants in a decade, and implementing rules to protect borrowers from unaffordable debts.
The SAVE Plan
The government’s Saving on a Valuable Education plan, an income-driven repayment initiative, seeks to ease the financial strain of student debt.
Tailored to a borrower’s income and family size, the plan aims to halve payments for undergraduate loans and potentially reduce monthly payments to zero for many borrowers. The initiative holds the potential to benefit over 20 million borrowers.
The SAVE plan also ensures that undergraduate loan payments are reduced, potentially reaching $0 for some borrowers. It prevents balance growth if required payments are met, with the Department of Education halting monthly interest charges not covered by the borrower’s payment. Additionally, the plan offers early forgiveness for balances of $12,000 or less after 120 payments, benefiting low- and middle-income borrowers, community college students, and those in public service.
Compared to the Revised Pay-As-You-Earn plan, the SAVE plan is expected to bring about a 40 percent reduction in total payments per dollar borrowed, providing substantial savings for various borrower categories. Borrowers already on the REPAYE plan will be automatically enrolled in the SAVE plan, experiencing adjusted payments without the need for further action.
Over 5.5 million borrowers, including 2.9 million exempt from payments, have enrolled in the plan.
Recognizing the need for additional time, the Biden administration also previously extended the student loan forgiveness deadline, urging borrowers to submit loan consolidation applications by April 30, 2024.
As of the second quarter of 2023, the overall student loan debt in the United States has surpassed $1.77 trillion, underscoring the urgency of ongoing efforts to provide direct financial support and relief for borrowers.
