Federal Student Loan Repayment Resumption Sparks Democratic AG Concern

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  • A group of 19 Democratic AGs wrote a letter to the President and the Secretary of the U.S. Department of Education asking for stronger protections for borrowers as federal student loan payments resume following a three-and-a-half-year pause during the COVID-19 pandemic.
  • In the letter, the AGs express concern that a number of circumstances will align and lead to widespread errors or harm to borrowers when repayment begins, including servicer struggles to operationalize recent improvements to the federal loan repayment system; the transfer of nearly 30 million borrower accounts to new servicers during the pandemic; and insufficient staffing at servicers, many of which have never dealt with such high volumes.
  • The AGs urge the federal government to increase efforts to mitigate the potential harm to borrowers, including directing servicers to provide no-interest administrative forbearance to any borrowers who are unable to obtain accurate information or access affordable monthly payments, and to apply the same forbearance to borrowers who are awaiting a decision on loan forgiveness.
  • In addition to seeking further protections for student loan borrowers, AGs are also on alert for unfair or deceptive conduct by student loan debt relief services, as recently discussed by our colleagues Chris Allen and Keturah Taylor on the State AG Pulse podcast (and if you’re not listening each week as we dive deeper into the stories in this newsletter, you should!).
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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