Debt ceiling agreement affects millions of students in U.S.

WASHINGTON – The debt ceiling agreement reached by lawmakers will affect millions of students in the U.S.

The 99-page bill prohibits the Secretary of Education from extending the repayment break for students who took out loans to pay for their studies.

The average rate for federal student loans in the U.S. is about $400 per month.

Congress could vote on the bill this week.

Activists say the bill would harm millions of American families.

The worst thing for borrowers would be a sudden and frightening restart of payments.

Natalia Abrams, president and founder of the Student Debt Crisis Center, said the proposed legislation sends a discouraging message.

She said efforts to help borrowers will be scaled back.

House Republicans ultimately failed to fully repeal President Joe Biden’s proposed plan to cancel student debt.

 They did, however, succeed in inserting a provision that activists say could be devastating to millions of borrowers across the country.

The repayment breaks put in place at the start of the Covid 19 pandemic were extended eight times to save borrowers hundreds of billions of dollars in payments and interest.

It would be repealed 60 days after June 30, 2023.

House Speaker Kevin McCarthy, in an appearance on Fox News, said the “break is over” if the debt ceiling bill passes.

Debt relief advocates said it will have a catastrophic financial impact on more than 50 million people.

“This has huge and catastrophic financial implications for 50 million+ people,” the Debt Collective, the nation’s first debtors’ union, wrote on Twitter.

The Biden-led White House had already pledged to end the student loan repayment hiatus within 60 days.

The debt ceiling agreement codifies that promise into law, potentially complicating the White House’s ability to authorize another pause.

The Debt Collective noted that the Biden administration “was “preparing to resume payments because it wanted to cancel a lot of debt at the same time – 20 million accounts were zeroed out”

Because of Covid’s impact, the Biden administration said that resuming repayment must be coupled with relief.

“Because of Covid’s impact, the Biden admin said returning to repayment needed to be coupled with relief..The debt-ceiling bill agreement reached by lawmakers is deeply harmful to millions of American families—the worst thing for borrowers would be a sudden and startling restart of payments,” the group wrote. 

Education Secretary Miguel Cardona stressed that the Biden administration would maintain the ability to suspend student loan payments.

The Debt Collective cautioned, however, that it could take weeks or months for the Biden administration to implement another payment pause if it deems it necessary.

The government could also choose not to impose another payment freeze, even if millions of people are struggling to make their payments.