Feds tell student loan providers not to reach out about resuming payments

The federal government has told student loan providers not to contact borrowers about resuming payments with just over a month before the moratorium is supposed to end on Aug 31. 

NBC News reported that the Education Department has instructed loan servicers not to contact borrowers as recently as “the last couple of weeks,” according to Scott Buchanan, head of the Student Loan Servicing Alliance that represents all companies that administer the federal loans that are covered by the federal moratorium.

“We needed to know two months ago, but really, we’re at the Rubicon here. If we get into August and don’t have guidance on this, I mean, we are really creating an untenable position for us and for borrowers,” Mr. Buchanan told the network.

A source familiar with the matter told NBC that it’s likely the moratorium will be extended.

EdSource reported that Education Secretary Miguel Cardona told the Senate Appropriations subcommittee on June 7 that the moratorium “could be extended or it could be that it starts there,” referring to the moratorium’s expected end date.

Mr. Cardona did tell the Appropriations subcommittee that borrowers would get plenty of notice before payments resume. 

The moratorium has been in effect for the nation’s more than 43 million federal borrowers since the onset of the COVID-19 pandemic.

Former President Donald Trump instituted the moratorium in March 2020 through September of that year, and then extended it until January 2021.

President Biden extended the moratorium until September 2021 and then until January of this year. The administration eventually extended it until May, and most recently to the end of August.