“Can’t Pay, Won’t Pay” Biden’s Broken Promises And Why Many Borrowers Are Refusing To Pay Back Their Debts

Millions of Americans burdened with student loan debt have resumed payments following a three-year pause that ended last fall. President Biden has chosen not to stretch the pandemic-era pause on federal student loan payments. President Donald Trump Initiated the pause in March 2020.

A report from the Department of Education reveals that 40% of the 22 million borrowers with outstanding bills have not made a payment. This translates to around 9 million Americans who are not meeting their payment obligations.

Student Loan Servicing Issues: CFPB Report

In January, the Consumer Financial Protection Bureau said that borrowers were facing problems repaying. This includes receiving incorrect and delayed billing statements. Along with delays in processing, among other issues.

“Borrowers are encountering long hold times when trying to reach their student loan servicer. They’re also experiencing significant delays in application processing times for income-driven repayment plans. And also receiving inaccurate billing statements and disclosures,” the federal agency said.

Servicer Errors And Inadequate Support For Federal Student Loan Borrowers

Federal student loan borrowers have been getting bills from loan servicers that are “faulty and confusing.” These bills include mistakes like due dates that are too early. Also, monthly amounts are too high because they’re based on old poverty guidelines, according to the agency.

“Many servicers were able to boost their financial performance by dramatically reducing staffing during the pandemic. However, servicers have not met the foreseeable borrower demand for help with their loans,” the agency said.

CFFB Report Reveals Delays In Student Loan Repayment Plans

The bureau also discovered big delays in handling applications for repayment plans. They found that between August and October, millions applied for income-driven repayment plans.

By late October, service providers said there were over 1.25 million applications waiting. More than 450,000 of them had been waiting for more than 30 days. Some service providers took five times longer than others to process applications, according to the bureau.

Education Dept. Halts Payments To Student Loan Servicers

The Department of Education earlier said it would stop paying three student loan companies. They want to protect borrowers better and make sure companies do their job right.

The agency found that Aidvantage, EdFinancial, and Nelnet didn’t send bills on time to 758,000 borrowers as they were supposed to.

Debt Non-Payment: Philly Fed and MarketWatch Insights

According to the Federal Reserve Bank of Philadelphia, more than half of people who didn’t make payments in October couldn’t afford them. About 25% missed payments because of mistakes in handling their loans, and another 21% decided not to pay on purpose, says the Philly Fed.

MarketWatch’s article delved into why some individuals opt not to pay their debts. It explores the diverse reasons behind their choices and sheds light on the various challenges borrowers encounter.

Richelle Brooks: From Student Loan Struggles To Debt Strike Activism

Richelle Brooks, is a 36-year-old living in Los Angeles. She graduated with a doctorate in education in 2018. During tough financial times, she enrolled in more schooling to temporarily freeze her loan payments. After reading a Debt Collective’s book “Can’t Pay, Won’t Pay: The Case for Economic Disobedience and Debt Abolition,” leading her to join a debt strike.

This movement aims to bring together borrowers who are refusing to pay their student loans. The goal is to raise awareness about the challenges faced by borrowers and advocate for the cancellation of large amounts of debt.

Challenges In Student Loan Repayment: Michelle Rose’s Experience

Michelle Rose, a 45-year-old from Toledo, Ohio, had trouble getting approval for a better repayment plan. She applied for the new SAVE repayment program, but it took a long time for her application to go through. The Consumer Financial Protection Bureau says there are over 450,000 applications like hers that have been waiting for more than 30 days.

Rose works in information technology and had a hard time paying her student loans even before the pandemic. Dealing with all the paperwork made her even more sure that the college money system is really messed up.

Student Loan Forgiveness Hurdles: Elli England And Michael Baugh’s Experience

Elli England and her husband, Michael Baugh, who reside in Anaheim, California, opted not to pay their bills in December. They’re waiting for their debts to be forgiven. Baugh is a former special education teacher. He is eligible for debt forgiveness through the Public Service Loan Forgiveness program.

But their journey has been troubled by slow paperwork and frustrating bureaucracy. Even though Baugh has been approved for disability benefits, his request to have his student loans forgiven due to total and permanent disability is still being processed.

A Broader View

The MarketWatch article examines the bigger picture of student loan difficulties. It looks at the problems with the system, like paperwork issues. It also looks at how stressful it can be for people trying to manage their money in this complex situation.

These stories show the big problems with the system, making people wonder if it’s fair and will last. The Debt Collective’s actions led to the Biden administration planning to cancel $136.6 billion in student debt. Yet, some borrowers still doubt the promises made.

Demands For A Change

As borrowers come together, the stories shared in this article show the pressing call for reform within the student loan system.

Borrowers want more than just temporary breaks. They’re asking for real changes like forgiving debts and fixing the system so it helps, and not trap, people. The big question is whether this fight will lead to big changes or just show how hard it is to deal with student loans.

Closing Thoughts; Where Will This Lead?

The Biden administration is under pressure to keep its promises about helping with student debt and making college more affordable. The protest against student loans shows things are changing and forcing us to deal with problems in the system.

As more people stand up against student loan problems, we wonder: Will this make big changes happen, or just show how hard dealing with student loans is?