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Domino: A Blog About Student Debt The End of the Payment Pause is a Civil Rights Issue

The End of the Payment Pause is a Civil Rights Issue

By Amy Czulada | February 22, 2022

The expiration of the federal student loan payment pause set for May 1 means that millions of people across the country will yet again be forced to make monthly student loan payments. As advocates continue to push the Biden Administration to extend the pause on student loan payments, it is crucial that we recognize how ending the payment pause will uniquely impact Black and Latino borrowers. 

The racial wealth gap significantly contributes to Black and Latino borrowers’ having to take on more student debt to access higher education. In addition to more debt, these borrowers  experience higher rates of delinquency and default. Wage and employment discrimination intensify these disparities. All of this was true before the pandemic began and is worse now.

The pandemic has heightened already unequal outcomes for Black and Latino borrowers in the United States. Job interruptions, layoffs, and furloughs caused by the pandemic have disproportionately affected people of color, most especially Black and Latina women. On a broad scale, the economy has not recovered from the pandemic as quickly as many pundits had hoped and speculated that it would. Job growth has stagnated in the past few months, and the unemployment rate for Black workers is still almost double the unemployment rate for white workers. Plus, with the supply chain issues still precarious, the economy is projected to have a bumpy ride forward for the foreseeable future. Many borrowers are not prepared to shoulder more expenses at this time, and the return repayment alongside a lopsided economic recovery will likely disproportionately burden Black and Latino borrowers. According to a recent poll conducted by Data for Progress and the Student Borrower Protection Center, nearly 40% of borrowers are not confident that they can make payments when they resume in May of 2022.

Despite the precarious economic outlook, the U.S. Department of Education is moving forward with ending the payment pause on May 1, 2022. Servicers will need to be ready to address borrowers’ questions and concerns after having been on hiatus from much of that work during the past two years. 

Both before and during the pandemic, student loan servicers continuously doled out misinformation raising doubts about their ability to respond to borrowers’ inquiries accurately. Recent news that PHEAA—the servicer handling the Public Service Loan Forgiveness Program—has failed to consistently implement new PSLF criteria under the Department of Education’s time-limited waiver process, further demonstrates that servicers simply are unwilling or ill-equipped to handle the influx of paperwork and questions brought on by the end of the payment pause. This news combined with the fact that several servicers have announced their departure from servicing altogether and, even during the payment pause, borrowers are reporting long call wait times, brings into question the readiness of any of the servicers to resume payments. Research demonstrates that servicers have a significant hand to play in borrowers’ outcomes, and that outcomes for borrowers of color are disproportionately affected by servicers’ lack of accountability.

Additionally, research has increasingly shown that widespread debt cancellation would narrow the racial wealth gap and begin to address racial disparities in the student loan system. But thus far, the Biden Administration has yet to meet the President’s campaign promises on broad student debt cancellation. Since taking office, President Biden has used his authority to cancel only a fraction of borrowers’ outstanding $1.7 trillion debt, using existing programs to do so. 

More must be done.

The student loan payment pause has been a lifeline for borrowers, particularly Black and Latino  borrowers who disproportionately bear the brunt of the student debt crisis. To turn on payments while the country is still in the midst of a deadly pandemic and economic crisis is simply callous and runs counter to the administration’s stated commitment to advancing racial equity. By turning payments on without canceling debt and fixing the broken repayment programs, one should not expect anything less than a grave crisis—especially for borrowers of color—come May 1, 2022. 

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Amy Czulada is the Outreach & Advocacy Coordinator at the Student Borrower Protection Center. Previously, Amy was a Research Analyst at 32BJ SEIU in New York City.

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