It will be ‘a challenge to motivate’ student-loan borrowers to pay off their debt after a 2-year pause, the Education Dept. tells government watchdog

Us president joe biden listens to a question from a reporter during a press conference on the eve of his first year in office, from the east room of the white house in washington, dc on january 19, 2022. - president joe biden holds a rare press conference wednesday to kick off his second year in office, hoping to reset the agenda ahead of what could be brutal election reversals for democrats. (photo by mandel ngan / afp) (photo by mandel ngan/afp via getty images)

President Joe Biden seen in the East Room of the White House in Washington, DC on January 19, 2022.MANDEL NGAN/AFP via Getty Images
  • Student-loan payments are resuming in 90 days after a two-year pandemic pause.

  • Education Dept. officials say it will be “a challenge to motivate” borrowers to pay those monthly bills in May.

  • The Dept. will continue outreach to borrowers, even as advocates are calling for debt cancellation.

It’s no secret that resuming student-loan payments after a two year pause will be difficult — and the Education Department said that’s the reality for both 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 pause on payments for the third time in December, and while he did not explicitly say it would be the “final” extension, as he did in August, he still noted that borrowers should “do their part” in preparing to pay off their debt in under three months.

According to the GAO, Education Department officials “expect it will still be a challenge to motivate borrowers to resume repaying their loans after over two years of payment inactivity.”

“In addition, after months of informing borrowers that payments would resume in February 2022, Education’s outreach efforts must now shift towards preparing borrowers for the new May 2, 2022, start date after the most recent extension of loan relief,” the agency added.

To address the “challenge” of transitioning 43 million federal borrowers back into repayment, the GAO said the Education Department emailed 125.6 million monthly messages to about 34.9 million borrowers from August through November 2021. While as of December it had valid email addresses for 87% of all borrowers impacted by the payment pause, it plans to continue email outreach to ensure borrowers are aware of the May 1 restart date.

It will also target outreach to certain borrowers, including those at increased risk of delinquency, or falling behind on payments, those in default on their loans, and those who had automatically paid their bills prior to the payment pause. Insider reported last week that, according to GAO, 50% of all federal student-loan borrowers were identified as “at-risk” of falling behind when payments resume in May.

Prior to the third payment pause extension, Federal Student Aid (FSA) head Richard Cordray also noted challenges that will arise when payments were set to resume on February 1. He said in September that transitioning tens of millions of student-loan borrowers back into repayment would be a significant challenge, and that the multiple extensions of the payment pause sowed “tremendous confusion about what even the immediate future may hold.”

“The old saying is that ‘the wish is father of the thought,’ and we can expect that many, many borrowers will not be eager to return to repayment when they have been led to believe, or even to hope, that was never going to happen,” Cordray said. “Getting over that psychological hurdle with millions of Americans may be a much harder job than we know.”

Even so, Biden’s administration has been clear in its messaging that borrowers should plan to pay off their student debt in 90 days while lawmakers and advocates say that if the pause can keep being extended, there’s no reason why student debt cannot be canceled altogether.

As NAACP President Derrick Johnson wrote in a statement: “If you can afford to pause student loan payments over and over again, you can afford to cancel it.”

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