Nineteen state attorney generals, including Pennsylvania’s, signed a letter expressing concerns and asking for reforms toward federal student loan services.
PENNSYLVANIA, USA — Over 40 million federal student loan borrowers are set to repay this month after a 3.5-year pause on payments because of the COVID-19 pandemic.
However, it’s not without issues.
Nineteen state attorneys general, including Pennsylvania’s, signed a letter to the U.S. Department of Education and said they want to express their “serious concerns about the challenges of this process and impending harm to federal loan borrowers in our states.”
The attorneys general who signed the letter include those from: Arizona, California ,Connecticut, Colorado, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New York, Oregon, Pennsylvania, Vermont, Washington, Wisconsin and Washington, D.C.
They also said in the letter that the problem arose when many loan servicers opted out of the business entirely during the COVID-19 pandemic. This left a majority of borrowers with new servicers who are not prepared for the volume of new accounts, the letter said.
Many borrowers right now are experiencing servicing errors such as lost paperwork, incorrect loan balances and delays in communication.
However, the most common problem is when borrowers reach out to resolve their issues. The letter says that many borrowers are regularly given wait times over 60 minutes, and some have been quoted hold times exceeding 400 minutes.
Despite these problems, many borrowers are still seeing interest piling on their accounts.
“I am a father of five,” said Michael Ramirez, a loan borrower. “A lot of money that would have gone to outings, little extra stuff from the grocery store just to make sure student loans are paid off.”
Because of these servicing issues, the 19 state attorneys general argued borrowers should have their student debt placed in “non-interest-bearing administrative forbearances.” This means borrowers should not have their loan accrue any more interest until these problems are resolved.
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