NY.- After an unprecedented span of nearly three years in which student loans went uncollected due to the pandemic, millions of borrowers began paying off their debt when collections resumed late last year. But nearly as many people aren’t doing so.
That reality, coupled with court decisions that have regularly upended the rules, has complicated the government’s efforts to restart its system to collect the $1.6 trillion it is owed.
By the end of March, six months after the shutdown ended, nearly 20 million borrowers had made their payments as scheduled.
But nearly 19 million did not, leaving their bills unpaid or on hold, according to the most recent data from the Department of Education.
Seven million federal loan borrowers were at least 30 days late on their payments by the end of 2023. That was the highest rate of late payments since 2016.
Under a policy adopted by the Biden administration, those borrowers will not face penalties for failure to pay until October.
The reasons why debtors are not paying are varied.
Some say they don’t have the money to do so, while others are mired in bureaucratic chaos.
Many people are taking advantage of the grace period that will last until September, during which the last payments will not be reported to the credit bureau, although interest will continue to accrue.
When President Biden ended the moratorium that began in March 2020 under President Donald J. Trump, he pledged to fix key parts of the long-troubled federal lending program.
Although the Supreme Court struck down Biden’s most far-reaching policy — to forgive at least $10,000 in debt for each of millions of borrowers — his administration resurrected other ways to wipe out debt.
Biden also created a new payment program, SAVE, which reduced payments for many borrowers or eliminated them for millions of low-income workers.
Consumer advocates praised those measures, saying they were vital to making debts manageable.
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