Jacquelyn Martin/Associated Press
- Rep. Virginia Foxx and Sen. Richard Burr said they're worried about student-loan payments restarting in February.
- They said the Education Dept. hasn't detailed specific plans for transitioning borrowers from three major servicers that shut down.
- This has them "deeply concerned" for the payment pause to lift in four months.
- See more stories on Insider's business page.
When President Joe Biden extended the student-loan payment pause in August through the end of January, his Education Department made clear that it would be the "final extension" for the 43 million borrowers with federal student-loans.
Two top Republicans said the department has failed to provide sufficient information on how the transition to repayment will be completed in just four months.
On Tuesday, Rep. Virginia Foxx and Sen. Richard Burr, ranking members of the House and Senate education committees, sent a letter to Education Secretary Miguel Cardona requesting additional information on how he plans to transition millions of borrowers back into repayment smoothly. They said that prior to the August extension, Cardona failed to respond to their June 2 letter regarding the department's payment restart plan, and their questions still "remain unanswered."
"The lack of clarity and guidance about the process surrounding returning borrowers to repayment is as troubling as the process is uncertain," the Republican lawmakers wrote. "We remain deeply concerned about the ability of the Department to ensure a smooth transition to repayment in four months."
The lawmakers also expressed concern with the transition of borrowers to new student-loan companies after three of them announced they are not planning to renew their federal loan servicing contracts. The Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources announced they would be shutting down their loan services in June, and just hours after the Tuesday letter was released, Navient – which services 6 million federal student-loan borrowers – announced its plans to close, as well.
That means that the Education Department will have to administer the transition of close to 16 million borrowers to new student-loan companies, and Foxx said the two letters she sent regarding that transition went unanswered, as well.
Insider previously reported that Richard Cordray, the head of the Federal Student Aid (FSA) office, has acknowledged the challenges with restarting student-loan payments in February. When speaking at the Education Finance Council earlier this month, he noted the "psychological hurdle" borrowers might encounter with the payment restart.
He said that "we can expect that many, many borrowers will not be eager to return to repayment when they have been led to believe, or even to hope, that was never going to happen. Getting over that psychological hurdle with millions of Americans may be a much harder job than we know."
But, as some borrowers have told Insider, the issue is much more than psychological - they fear they will not have the financial means to make payments again come February.
"Restarting payments makes me very anxious because I somehow have to find that extra $200," one borrower said. "I just don't have it."
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