(Excerpts from Inside Higher Ed)

• Borrowers are less than three months away from having to resume making payments on their student loans, and although loan servicers are well into the process of executing the Department of Education’s transition plan, a huge majority of borrowers say they aren’t financially prepared for repayment to begin.
• The department announced in August that it would be extending the student loan repayment pause—which has been in effect since March 2020 due to the COVID-19 pandemic—for the fourth and final time until Jan. 31, 2022. After that date, loan payments will resume, interest will begin to accrue again and collections on defaulted loans will restart.
• The task at hand for the department and federally contracted loan servicers is unprecedented—the student loan system has never been switched on for tens of millions of borrowers all at once. At the same time, millions of borrowers will be making payments to a different servicer than they were assigned prior to the pandemic, given that three servicers have decided to end their contracts with the department next month.
• Even though the department has sent emails to borrowers about payments resuming and shared guidance with loan servicers about what the process will look like, that same information hasn’t been shared with the public. That needs to be clearer as the resumption draws closer, said Abby Shafroth, a staff attorney at the National Consumer Law Center.
• “We would like to be hearing more from the department about how they are going about making sure that the servicers that they contract with are ready and prepared to take on this challenge,” Shafroth said. “Are the servicers going to be adequately staffed and trained so that borrowers don’t have to wait hours on the phone to get through to someone? We don’t really have any assurance of that so far, and we need to so we can be confident that this is going to go decently for borrowers.”
• “Borrowers are stressed about going back into repayment at just the black-and-white level of, ‘How am I going to afford this?’” said Cody Hounanian, executive director at the Student Debt Crisis Center (SDCC). “That’s where the Department of Education and student loan servicers have to come in and provide the proper guidance.”
• “We really need to think diligently about what it means to start payments and if we’re better off just extending this deadline and canceling student loan debt,” Hounanian said. “The system is quite broken and in need of serious repair.”