Millions of people breathed a sigh of economic relief when the president announced a break for student loan borrowers amidst the uncertainty of coronavirus.
Standing in the Rose Garden, President Donald Trump outlined the strength of the economy despite the downturn in markets caused by concerns over the spread of COVID-19.
It was this small tidbit that caught the attention of the 43 million people who owe money on federal student loans:
“I've waived interest on all student loans held by federal government agencies, and that will be until further notice.”
Student loan debt is one of the largest debt burdens in the entire U.S. economy. It amounts to $1.6 trillion — more than the annual defense budget.
Confusion about how to implement the change abounded with many borrowers hopeful that the financial relief will help their families during the uncertain times but unsure how to access it.
The uncertainty extends beyond borrowers, though. Many loan servicers are telling their clients that they do not know how to proceed either.
Navient, one of the top student loan processors in the country, has set up a website to better inform borrowers about their options.
At the top of that website, in red letters, Navient makes it clear that it is currently business as usual: “We’re working with the U.S. Department of Education to implement this change, but at this moment, we don’t have any additional details on the program.”
Another federal loan servicer, Nelnet, recently told a client on Twitter: “We're following the news reports from Washington regarding potential student loan relief during the pandemic. At this point, nothing has changed.”
The Department of Education is trying to work through the change, although so far it hasn’t been able to provide the specific details that borrowers need.
According to a Department of Education spokesperson, “The Department is working with federal loan servicers to get this operationalized.”
“The waivers will be retroactive to March 13, the date of President Trump’s announcement,” the spokesperson further clarified.
On Capitol Hill, lawmakers are also calling for more student loan relief, with Massachusetts Congresswoman Ayanna Pressley tweeting that any stimulus needs to relieve Americans of their student loan debt.
Her call was echoed by Massachusetts Senator Elizabeth Warren, whose presidential campaign pushed to have nearly all of the student loan debt in the country erased before she suspended her run earlier this month.
The Trump Administration’s economic stimulus plan is still in the works but it could be an $850 billion package (or higher) that includes a bailout for the airline industry, an influx of cash payments to Americans, and a payroll tax cut. The administration has not clarified whether student loans are part of it.
Congress will still have to debate the package, and it is unlikely to pass the Democrat-controlled House of Representatives without substantial changes.