Private student loan lenders push to resume payments in May
- Private lenders are pressuring Congress to resume student loan payments in May, per Politico.
- Refinancing firm SoFi wrote a blog saying “wealthy and able” borrowers should be repaid.
- He also said Biden should fulfill his $10,000 pardon campaign pledge and target aid to those who need it most.
Major private lenders say enough is enough — President Joe Biden should not give federal student loan borrowers a fourth break on debt repayments.
Last week, the CEO of SoFi — one of the nation’s largest student loan refinance companies — wrote a blog about student loan payments. Anthony Noto wrote that the Biden administration continued to “trivialize” over potential student loan relief, and he recommended that, to provide certainty for borrowers, Biden fulfill his campaign pledge to cancel $10,000 of student debt, targets the pause on payments only for those in “serious difficulty” and puts “wealthy and able” borrowers back in repayment on the scheduled May 1 resumption date.
“Borrowers today are paralyzed by uncertainty,” Noto wrote.
“If the government unnecessarily extends the broad moratorium for a fourth time, not only will it add to the country’s inflation woes and unnecessarily hand over to the wealthy who are willing and able to repay their debts, but it will severely disrupt people’s ability to make long term financial plans,” he added. “American borrowers and prospective students need clarity to make long-term financial decisions, but the burden of uncertainty surrounding the future of their student loan debt makes that impossible.”
SoFi, along with other private lenders, is taking their efforts to Congress. Politico first reported Friday that several lenders are lobbying Congress to cut student loan relief to a targeted group of federal borrowers. According to a document obtained by Politico, titled “Returning to normal means ending student loan payment pause,” lenders argued that another extension of the payment pause would be “unnecessary” given that borrowers are better off financially than they were at the start of the pandemic. They also argued that another payment pause would exacerbate inflation and help wealthy borrowers the most.
Student loan payments have been suspended for more than two years as part of pandemic relief first implemented by former President Donald Trump and then extended three times by Biden. With the current payments pause set to expire on May 1, some Democratic lawmakers and advocates have argued that further relief is warranted and that Biden should not send borrowers back for repayment until he implements a broad student loan relief or fundamentally reformed the student. -the lending industry to make it work for every borrower.
But many Republican lawmakers and conservative advocates agree with SoFi, saying the pause in student loan payments has hurt taxpayers and shouldn’t be extended any further.
The Case for and Against Broad Student Loan Relief
After White House Chief of Staff Ron Klain told Pod Save America earlier this month that borrowers would be required to get some form of relief before payments resume in May, Noto de SoFi wrote on Twitter that the “original intent of the moratorium was awesome,” but it has since cost taxpayers $150 billion. He said resuming payments is “the hardest thing to do instead of the easier route to indecision, wasting taxpayers’ money”.
—Anthony Noto (@anthonynoto) March 4, 2022
His argument is one that a number of Republican lawmakers have used to criticize widespread student loan relief. The House Education Committee’s top Republican, Virginia Foxx, said in January that the suspension of student loan payments was “troublesome” and that a broad loan forgiveness would be “a huge mistake.” She cited the $150 billion cost to taxpayers that came with Biden’s additional extension, and similar to what Noto said, she wrote that providing a clear timeline for repayment will alleviate “borrower confusion.”
Meanwhile, Democratic lawmakers and pundits argue otherwise. The senses. Elizabeth Warren and Chuck Schumer – the leaders of the $50,000 student loan forgiveness proposal – have always argued that broad relief would stimulate the economy because it would allow money that would have been used for monthly payments to be invested elsewhere.
New York Rep. Mondaire Jones recently echoed that sentiment, saying “Americans who found themselves with disposable income started spending it on food, car payments, and housing, among other things. in fact”. to strenghten the economy in the process.
Still, Biden has yet to comment on further relief, so borrowers are still on track to start payments again in May. And as Insider previously reported, student loan companies have spent millions of dollars in lobbying efforts to stop Biden from canceling student debt, and while it’s unclear just how influential they might be in decision-making, borrowers have yet to see the broad relief they were. promised.