Huge challenges and responsibilities facing Federal Student Aid
October 28, 2021
A defining moment for FSA.
That's how Richard Cordray, Chief Operating Officer of Federal Student Aid (FSA), described the end of the student loan payment pause to occur on January 31, 2022.
During the Higher Education and Workforce Investment Subcommittee hearing on October 27, Cordray said the plan to return borrowers to repayment focuses on clear communication, quality customer service, and targeted support.
Additional insight into the magnitude of ending the payment pause came from the Department of Education in an October 26 Electronic Announcement, which summarizes quarterly reports posted to the FSA Data Center.
According to that Electronic Announcement, about 24 million Direct Loan recipients with outstanding loans of about $967 billion are now in forbearance status, and over 99% of those balances are in the CARES Act forbearance. When including ED-held FFEL recipients, approximately 25 million recipients with more than $1 trillion in outstanding loan balances are now in forbearance.
Complicating the end of the payment pause is the news that some servicers have ended their contract with the Department of Education, creating a situation in which many borrowers will be working with a different servicer when payments resume.
No doubt, how this transition to repayment is handled will be a defining moment for many, including FSA and borrowers who may need additional support.