Cardona suspends collection of 1 million federal student loans in default
Source: Politico
The Education secretary's action applies only to borrowers who have defaulted on their federally guaranteed loans made by private lenders under the Federal Family Education Loan program.
By MICHAEL STRATFORD
03/30/2021 01:03 PM EDT
The Biden administration on Tuesday halted the collection of more than 1 million federally guaranteed student loans, extending relief to a subset of the borrowers who have been left out of the government’s unprecedented freeze on loan payments and interest over the past year.
The Education Department said that it would pause the collection for all borrowers who have defaulted on student loans that are guaranteed by the federal government but held by a private entity. It also will set the interest rate to 0 percent on those loans.
“Our goal is to enable these borrowers who are struggling in default to get the same protections previously made available to tens of millions of other borrowers to help weather the uncertainty of the pandemic,” Education Secretary Miguel Cardona said in a statement.
Key context: The CARES Act and executive actions from the Trump and Biden administrations had previously covered roughly 40 million Americans who owe student loans that are held directly by the Education Department. The monthly payments and interest on those loans have been suspended since March 2020, and the relief is currently set to expire at the end of September.
Read more: https://www.politico.com/news/2021/03/30/cardona-federal-student-loan-collection-478493
