The Education Department will start charging interest for 7.7 million borrowers in the Saving on a Valuable Education repayment plan beginning August 1. For the past year, interest has not accrued due to an interest-free pause implemented after federal court actions. The department claims compliance with a court order, while experts highlight the need for stability and a careful reauthorization of the Higher Education Act. Borrowers will owe interest on their existing balances, but monthly payments are paused until the forbearance ends.
"Congress designed these programs to ensure that borrowers repay their loans, yet the Biden administration tried to illegally force taxpayers to foot the bill instead," Education Secretary Linda McMahon said.
"Instead of getting caught in the political crosshairs, what borrowers need is stability and predictability," Melanie Storey said, advocating for a thoughtful reauthorization of the Higher Education Act.
"Even with aggressive outreach, three weeks does not leave much time for borrowers to enroll in a new repayment plan, particularly when a significant backlog of applications already exists," Storey added.
Borrowers will not have to start making monthly payments until the pause known as forbearance ends, although interest will begin accruing on existing balances.
Collection
[
|
...
]