With Time Running Out, Will ED Act on Debt Relief?

By Hugh T. Ferguson, NASFAA Staff Reporter

With less than two months until Inauguration Day, the Department of Education (ED) will need to decide if it will address the impending deadline on the student loan moratorium or allow the pause to lapse, effectively forcing President-elect Joe Biden’s administration to re-implement the policy.

While the transition process has been stymied by a number of lawsuits from the outgoing administration over election certifications, the General Services Administration’s (GSA) recent announcement that the presidential transition could begin frees up a number of resources for the incoming administration that could bring more certainty for federal agencies and create a smoother hand-off.

For ED, one of the most pressing policy decisions will concern the current student loan moratorium — which has provided borrowers with a pause in monthly payments, as well as interest accrual on their federal student loans — set to expire at the end of the calendar year.

The moratorium could be extended through the department, through a congressionally-approved spending bill or aid package, or through executive action from President Donald Trump. 

“There's a lot of incentive, it would seem, to roll over the moratorium into the new year, if there's not any larger kind of effort on it as part of a [relief] package between now and the end of the year,” said Rick Hess, director of education policy studies at the American Enterprise Institute (AEI).

However, it is also unclear whether ED would take the lead, with Congress slated to consider a spending bill before the December 11 deadline to fund the federal government, and uncertainty as to whether Trump would take a unilateral approach.

“The Secretary has the authority to extend and expand the payment pause, because we are in a national emergency,” said Viviann Anguiano, associate director of postsecondary education at the Center for American Progress Action Fund. “I don't foresee that happening, but I do think it's possible.”

These logistical challenges — a log-jammed Congress with an outgoing presidential administration — are where the delayed transition process could have an impact. Further, a recent report from Federal Student Aid (FSA) found that its loan servicers will face a significant burden in attempting to convert millions of borrowers back into repayment all at the same time once the automatic forbearance period comes to a close.

“The ability to get the White House to sign off or support [an extension] could be impacted just by all the distractions,” Hess said.

There’s also the issue of ameliorating the challenges posed to individuals enrolled in income-driven repayment plans. For the income-driven repayment plans, borrowers will need to either apply or recertify for the payment program if they have had a decrease in income during the pandemic and would like to lower their monthly payments.

 “Doing the income-driven repayment plans [is] really just an onerous process,” Anguiano said. “You have so many people coming on to repay their loans who have to go through these processes to prove that they lost income.”

Adding to the complicated process is the fact that loan servicers have, since the outset of the national emergency, been overwhelmed with callers trying to sort through their loans.

These delays could make it more difficult for individuals to get their budgets situated in the new year because it could become more difficult for servicers to handle new requests. 

ED did not respond to requests for comment.

Should ED not address these issues before a Biden transition, the president-elect’s administration could run into more congressional pushback from Republicans, not just in seeking out additional student debt forgiveness but also in attempting to continue the moratorium.

“There would certainly be more consternation. The further we get from the beginning of the pandemic, the more I think you're seeing some nervousness on the right, about continuing to pursue extraordinary measures,” Hess said.

Since Trump’s executive order did not face a legal challenge, it could prove difficult for Republicans to combat the policy and sort through who would have the legal standing to file a lawsuit, should Biden extend the pandemic debt relief via executive action.

“Frankly, there's the fact that folks on the right gave Trump carte blanche to do things that they would have freaked out about if they were done by a Democratic president,” Hess said. “With Trump out, and now that we would be 10 months into this emergency state, but Biden was in office, I think you would see more pushback. The question is whether anybody can do anything, whether anybody really has the ability to push back on it.”

 

Publication Date: 12/1/2020


David S | 12/1/2020 10:34:12 AM

So the same agency whose virtual conference crashed as soon as something like 15,000 people logged on will have to suddenly start collecting tens of millions of loans on January 1. Please, Congress, do something.

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