A congresswoman from Georgia has joined two colleagues to introduce legislation to create a ‘safety net’ for student loan borrowers who are about to enter repayment periods after nearly two years of a pandemic-induced reprieve.
Representatives Lucy McBath, Suzanne Bonamici of Oregon, and Susan Wild of Pennsylvania introduced The Student Loan Borrower Safety Net Act of 2021 which would take effect upon the end of the Department of Education’s COVID-19 pause on student loan repayments on February 1, 2022.
The legislation would “help borrowers during the transition period” by requiring increased outreach from lenders, providing protection for borrowers who miss payments, and making it easier for borrowers to get into income-driven repayment plans.
This bill addresses borrowers with federal student loans during the transition period following the end of the COVID-19 student loan repayment pause by:
- Providing earlier and more frequent outreach to borrowers that their payments are to resume;
- Making it easier for borrowers to get into income-driven repayment plans;
- Making it easier to access economic hardship support; and
- Extending the time period for servicers to contact borrowers who miss a payment.
“Students in Georgia and across our country have endured unimaginable difficulty over the last few years, and the student loan repayment pause served as needed relief in these difficult times,” McBath said in a news release. “As these payments come due once again, our work in Congress should support those seeking educational success. Our bill is an important step in protecting our student borrowers and helping safeguard their financial futures. I’m proud to lead this bill with my colleague Congresswoman Bonamici, helping to ensure America’s college students and graduates secure their financial health.”
“The pause on student loan repayment for the COVID-19 pandemic has been a lifeline for borrowers in Oregon and across the country,” said Bonamici in the same news release. “As the pause ends and payments resume, borrowers should be protected from the worst effects of missing payments, whether unintentionally or because of financial distress. The Student Loan Borrower Safety Net Act will provide borrowers with the help they need in this time of transition.”
“Students across the country deserve support and clarity about their student loan payments, especially as we emerge from the worst of the pandemic,” said Wild. “I am proud to support this legislation to ensure that borrowers have the best information possible about their debt obligations, and to help prevent Americans from defaulting on their loans.”
The legislation is supported by Pew Charitable Trusts, New America, and The Institute for College Access & Success (TICAS).
Regan Fitzgerald, manager of The Pew Charitable Trusts’ project on student borrower success, said:
“The Student Loan Borrower Safety Net Act would provide evidence-based policies to support borrowers—especially those most at risk of delinquency and default—as they prepare to resume repayment. These include easier access to affordable payment plans, a grace period to allow borrowers who can’t afford monthly payments to get back into repayment in good standing, and targeted outreach about the resumption of payments.”
“If payments are to restart in February, easier access to low and $0 payments will be important protections for all borrowers, but especially those hit hardest by the pandemic,” said Sarah Sattelmeyer, Project Director for Education, Opportunity, and Mobility at New America.
“If the Education Department resumes federal student loan payments as planned, it is imperative that borrowers be protected from financial harm and have easy access to clear information and affordable repayment options,” said Sameer Gadkaree, President, TICAS. “We applaud Reps. Bonamici, McBath, and Wild for introducing this important legislation to create key safety nets for millions of borrowers.”
It is co-sponsored by Representatives Emanuel Cleaver (MO-5), Danny Davis (IL-07), and Alan Lowenthal (CA-47).