Advocates worry that the resumption of payments and the legal challenges to President Biden's plan to cancel up to $20,000 in student debt can result in catastrophic consequences for vulnerable borrowers.
June 8, 2023, 5:14 AMJamilla Vanbuckley would like to buy a home one day.
The uncertainty comes amid a change in debt servicing companies for millions of borrowers and staffing shortages that experts see as unprecedented in consumer finance, resulting in logistical headaches, hourslong wait times, and potential communication errors in billing. "We are anticipating what has been described as a wave of student loan defaults and delinquencies," said Cody Hounanian, executive director of nonprofit Student Debt Crisis Center.Without having to pay for student loans over the last three years, many Americans have created strict budgets that do not include a monthly student loan payment, according to Shafroth. With a new monthly student loan bill averaging $160, something in these budgets has to give.
Complicating the resumption of payments is the logistical hurdle of suddenly resuming payments for millions of Americans, which a Department of Education spokesperson described to ABC News as "unprecedented" and "herculean." The Department of Education spokesperson told ABC News that it recognizes the return to repayment will result in "significant financial hardship" for borrowers but is committed to helping borrowers.
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