The U.S. Department of Education (USDE)’s automatic student loan forbearance policy, enacted in March 2020, means borrowers haven’t been required to make student loan payments, their balances accrued no interest and debt collection agencies have been barred from attempting to collect on past-due loans. Millions of borrowers have enjoyed relief from the grind of payments — in fact, a study found less than 11% of borrowers have made payments during forbearance.
This was all slated to end on January 31, 2022, and borrowers began preparing for tighter strains on monthly budgets. But cue the collective sigh of relief — just before Christmas, President Biden announced the relief will be extended through May 2022 due to the surging Omicron COVID-19 variant.
Whenever forbearance eventually ends, how these borrowers handle restarting of payments will, undoubtedly, affect the rest of the economy.
While AMR does not collect student loan debt for the federal government, we do watch the industry closely — and we anticipate the resurgence in payments to affect our collection spaces. For many, student loan forbearance did not slow the accumulation of other bills. A recent report found people hospitalized with COVID often owe thousands of dollars in medical bills. The idea of using public transportation scared many, leading to an increase of car sales. Mortgage bailouts expired and loan defaults surged.
Rest assured — our team will continue to attempt to collect the outstanding debt with these sensitivities in mind. Our customer service approach hasn’t failed us yet! We will continue to treat borrowers with respect and kindness, helping them navigate challenging waters. If you have any questions, don’t hesitate to contact our team.