Most student borrowers, including the more than 500,000 in Connecticut, have no idea where they stand this week when it comes to whether they will have to begin repayment of those student loans in 2023.
President Joe Biden’s plan to forgive student loan debt for millions of borrowers nationwide lost another battle in court this week when a federal appeals court panel agreed to a preliminary injunction halting the program while an appeal plays out.
The ruling by the three-judge panel from the 8th U.S. Circuit Court of Appeals comes just days after a federal judge in Texas blocked the program. The Biden administration said it planned to appeal.
Cristher Estrada-Perez, executive director of the Student Loan Fund in Connecticut, said there’s no information for borrowers about where their applications stand either for the current program or the Public Service Loan Forgiveness Waiver program, which had an Oct. 31 deadline and forgives student loans for anyone who goes into a public service career.
The Public Service Loan Forgiveness program was approved years ago and is not part of the current legal challenges, but has gotten caught up in the current mess. Estrada- Perez said borrowers are struggling to find out if there is anything missing or even if the application has been approved.
Estrada-Perez, who has $80,000 in student debt, said she’s happy the Biden administration plans to appeal the overall student loan forgiveness issue.
However, in the meantime, she hopes they will continue to put repayments on hold while the issue winds its way through the court. She said those repayments are expected to start again in January, even for those who may be eligible for cancellation of that debt.
There’s been no word from the White House or the Education Department about whether they will extend the payment pause.
However, in a recent court filing, the department’s Under Secretary James Kvaal wrote that without wider debt cancellation, the agency expects a “historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic.”
With inflation at 7.7%, Estrada-Perez said making sure they don’t have to add another payment on top of what they already pay is crucial to the continued strength of the economy.
“It’s heartbreaking for borrowers and it does create exasperation and anxiety and they don’t know what’s going to happen next,” Estrada-Perez said.
She said she’s also frustrated that everyone tends to talk about debt in silos.
“We have a tendency to silo housing, health care and student debt, when it’s the same people experiencing them,” Estrada-Perez said.
She said it’s also frustrating because these student debt holders are also thought of as young when that’s not always the case. She said some of the people they are looking to help are having their Social Security checks garnished for these student loans either for themselves or because they helped their children.