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The student loan hiatus is ending soon. That looks unlikely.

On May 1, the federal government is scheduled to resume collecting $1.6 trillion of federal student loan debt from 43 million borrowers for the first time in more than two years.

Virtually no one involved in the collection process believes this will happen, but no extension of the hiatus has been announced.

“We’re 30 days out — that’s ridiculous,” said Natalia Abrams, founder of the Student Debt Crisis Center, a nonprofit advocacy group. “Borrowers check the news every day to plan their lives.”

The Department of Education, the top lender for Americans borrowing for college, outsources the work of collecting payments to six outside providers. Last month, it asked those loan servicers not to notify borrowers that their payments were due soon.

The service providers took this as a sign that the payment pause, which began in March 2020 as a pandemic relief effort and now spans two presidential administrations, is being extended again. But with just weeks to go before the end, they are still awaiting government guidance on whether to start billing borrowers again.

Two officials from different credit service providers said their companies had been reinforced to be ready for the May 1 restart. The executives, who spoke on condition of anonymity so as not to offend government officials, said they were frustrated by the lack of clear instructions.

These instructions come from the Department of Education, which administers federal student loans. But the department is also stuck: It’s awaiting a White House decision on extending the hiatus, according to two department officials involved in student loan deals.

Neither the White House nor the Department of Education answered questions about whether the May 1 restart date would be pushed back. In separate statements, both said the Education Ministry will continue to communicate with borrowers and service providers, including on “the manner and cadence of service providers’ contact with borrowers.”

Even lawmakers in Congress said they were in the dark about the administration’s plans. The two Democratic chairs of the Senate and House Education Committees — Senator Patty Murray of Washington and Rep. Robert Scott of Virginia — issued statements March 16 calling on the Biden administration to extend the payments pause to 2023.

“The student loan system is broken,” Ms Murray said. “It ruins lives and holds people back.”

The White House has not publicly responded to this request.

On Thursday, more than 90 congressional Democrats sent President Biden a letter urging him to extend the payment freeze and take executive action to “cancel student debt now.”

They added, “The resumption of repayment will financially destabilize many borrowers and their families, and create difficulties for many who could not afford to repay.”

A Democratic House official who was not authorized to speak publicly on the matter said frequent requests to the Department of Education for updates have yielded no clear answers about extending the moratorium.

But Ron Klain, Mr Biden’s chief of staff, hinted on the Pod Save America podcast last month that an extension was in talks.

“The President will review what we should do with the student debt before the hiatus ends or he will extend the hiatus.” said Mr Klain. “Joe Biden is currently the only president in history who has not had their student loans paid off during their entire presidency.”

https://www.nytimes.com/2022/04/01/business/student-loan-payment-pause-biden.html The student loan hiatus is ending soon. That looks unlikely.

Ian Walker

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