It will be ‘a challenge to motivate’ student loan borrowers in May: GAO
- Student loan repayments resume in 90 days after a two-year pandemic pause.
- Education Ministry officials say it will be “a challenge to motivate” borrowers to pay those monthly bills in May.
- The ministry will continue to educate borrowers, even as advocates call for debt cancellation.
It’s no secret that resuming student loan repayments after a two-year break will be difficult – and the Department for Education has said that’s the reality for itself and for borrowers.
The Government Accountability Office (GAO), a government watchdog that oversees federal spending and performance, released a report last week analyzing the impacts of resuming student loan payments on May 1. President Joe Biden extended the payments pause for the third time in December, and while he didn’t explicitly say it would be the “final” extension, as he did in August, he still even noted that borrowers should “do their part” to prepare to repay their debt in less than three months.
According to the GAO, Education Department officials “expect it will continue to be difficult to motivate borrowers to resume loan repayments after more than two years of inactivity.”
“Furthermore, after months of notifying borrowers that payments would resume in February 2022, education outreach efforts must now shift towards preparing borrowers for the new start date of May 2, 2022 after the final extension of loan relief,” the agency added.
To meet the “challenge” of transitioning 43 million federal borrowers to repayment, GAO said the Department of Education emailed 125.6 million monthly messages to about 34.9 million borrowers from August to November 2021. While in December he had valid email addresses for 87% of all borrowers affected by the payment pause, he plans to continue email dissemination to ensure that borrowers are aware of the May 1 restart date.
It will also target outreach to certain borrowers, including those who are at increased risk of default or late payment, those who are in default, and those who automatically paid their bills before the payment break. Insider reported last week that, according to the GAO, 50% of all federal student loan borrowers have been identified as “at risk” of falling behind when payments resume in May.
Ahead of the third payment pause extension, Federal Student Aid (FSA) chief Richard Cordray also noted the challenges that will arise when payments are set to resume on February 1. He said in September that transitioning tens of millions of student loan borrowers to repayment would be a daunting challenge, and that the multiple extensions of the payment pause have caused “huge confusion about what even the future immediate can book us”.
“The old adage says ‘wish is the father of thought’, and we can expect very many borrowers to be unwilling to repay when they have been led to believe, or even hope, that it will. was never going to happen,” Cordray said. “Overcoming this psychological hurdle with millions of Americans may be a much more difficult task than we realize.”
Even so, the Biden administration has been clear in its message that borrowers should plan to pay off student debt in 90 days while lawmakers and advocates say that while the break can continue to be extended, there is no there’s no reason why student debt can’t be canceled completely.
As NAACP President Derrick Johnson wrote in a statement, “If you can afford to put student loan payments on hold again and again, you can afford to cancel them.”