us department of education defaulted student loans

Markey (D-Mass.), Richard Durbin (D-Ill.), Chris Van Hollen (D-Md.), Brian Schatz (D-Hawaii), Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Tammy Baldwin (D-Wis.), Tammy Duckworth (D-Ill.), and Tina Smith (D-Minn.).On Apthe U.S. Joining the letter are Senators Bernard Sanders (I-Vt.), Cory Booker (D-N.J.), Edward J. Given that all defaulted borrowers have satisfied the statutory requirements for rehabilitation, in accordance with the CARES Act the Department should automatically rehabilitate all 7.5 million federally-managed student loans without the need for application,' the senators concluded. 'We urge the Department to take swift action to assist student loan borrowers throughout this pandemic using every available statutory, regulatory, and administrative authority. The Department has the authority to address these accumulating financial pressures and inequities by automatically removing 7.5 million borrowers with federally-managed student loans from default status.' 'Alarming racial disparities in student loan borrowing, repayment, and default were growing before the pandemic began and, absent immediate interventions from the Department, this broken system will continue to fail millions of borrowers after the current crisis is over. In their letter, the senators noted well-documented racial inequities in student lending and default.

The HEROES Act was also used by both the Trump and Biden administrations to unilaterally extend and expand the protections of the CARES Act. Noting that the CARES Act allows borrowers to rehabilitate their defaulted federal student loans without having to actually make any payments through September 30, the senators are encouraging Cardona to utilize emergency powers provided to the Secretary under the HEROES Act to automatically rehabilitate the millions of federal student loan borrowers who are currently in default. Social Security offset would have a particularly significant impact on older student loan borrowers and those on fixed incomes.ĭemocratic Senators, led by Senator Elizabeth Warren (D-MA) and Senator Raphael Warnock (D-GA), wrote a letter to Education Secretary Miguel Cardona, urging the Department of Education to take action. Federal lenders will also be able to restart the Treasury Offset program, which allows the government to intercept federal and state tax refunds and offset Social Security benefits, and apply these funds involuntarily towards a borrower’s student loan debt. Without a court order, the government can garnish a defaulted student loan borrower’s wages administratively, simply by sending a 30-day warning notice to the borrower’s last known address well-documented backlogs and ongoing delivery delays by the United States Postal Service will inevitably lead to borrowers receiving little notice, or none at all. The government’s draconian collections powers far exceed those of private student loan lenders and credit card holders. Department of Education and FFEL-program guaranty agencies resume collections efforts this fall, borrowers in default on their federal student loans will again be subjected to powerful collections practices.

Us department of education defaulted student loans