The Department of Education warned Wednesday that student loan defaults could increase by a "historically large" margin if President Joe Biden's loan forgiveness plan is blocked by lawsuits.
The partnership for global infrastructure and investment is being addressed by the U.S. president.
If the plan is not allowed to move forward, the Education Department believes there will be large increases in student loan delinquencies and defaults.
The main driver of increased delinquencies and defaults would be the Covid-19 epidemic, according to the filing.
The 18 million borrowers who would have their student loans discharged under Biden's plan are at risk of default because they assumed their debt would be wiped away.
The statement was filed in response to a lawsuit against the Biden Administration challenging student loan forgiveness on behalf of two borrowers in Texas. The Department of Justice was appealing. The student loan program was put on hold by the 8th US Circuit Court of Appeals after six Republican state attorneys general challenged it. The White House stopped taking applications for loan forgiveness.
There are 26 million people. The number of Americans applying for student loan forgiveness before applications were suspended was stated by the U.S. Secretary of Education. Sixteen million people had been approved.
Student loan payments are expected to be resumed next year. Payments for federal student loans have been on hold since March 2020. The emergency relief is set to end on December 31, 2022. Student loan forgiveness has become a topic of tension due to fears of a recession. Extending the payment and interest accrual pause would cost Billions of dollars a month.
The student loan forgiveness plan was put on hold by the court.
The Biden administration warns of a big increase in student loan defaults.
All Rights Reserved © 2024
