Most federal students loan & mortgage borrowers have been given reprieve, or comfort in reduced payments, during the Covid-19 pandemic. However, that will change at the end of January, when “forbearance” will end for student loans and mortgages, affecting some 43 million Americans. 💰 💰
When questioned about extending the student loan payment pause, White House press secretary Jen Psaki said: “We’re still assessing the impact of the Omicron variant, but a smooth transition back into repayment is a high priority for the administration.”
The administration is expected to release more information on their approach in the coming weeks as they interact with borrowers to be assure that things are in place place to get payers ready for the changes.
The same will go for millions of homeowners, who were allowed to pause their mortgage payments for up to 18 months. However, the end of mortgage forbearance could bring about a “wave of defaults.” Of the 7.7 million mortgage borrowers who took forbearance, over 300,000 homeowners are still behind on their mortgage payments.
More progressive leaders in the Democratic party such as Elizabeth Warren (D-CT) and Alexandria Ocasio-Cortez (D-NY 14th District) have urged Biden to consider a continued forbearance policy, with both even suggesting that Biden should “eliminate student debt” in an effort to boost a generation downtrodden by the excessive cost of education.
With that being said, Biden looks unlikely to offer homeowners or former students a break.
It’s untold how the public will react to the return of business as usual. We’ll be watching this story as the deadline draws closer.