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Pause on federal student loans ends — millions have to make payments again


All right. The time has come for tens of millions of federal student loan borrowers. October marks the first month they'll be required to make loan payments since the pandemic pause began 3 1/2 years ago. This return to repayment has raised questions, though, about the system's ability to handle so many borrowers at once. NPR's Cory Turner is here to explain all this. Cory, let's start with the return to repayment. What do we know about how it's going?

CORY TURNER, BYLINE: Well, we know there are about 28 million borrowers who are in good standing, A, and who will be expected to make a payment this month. There are also another 7 million who are in default, which means they're not in good standing yet, but there is a program to get them there. It's called Fresh Start, and it makes getting out of default pretty painless. In fact, I heard from a borrower this weekend I've been working with who just went through it and told me he was really surprised by how easy it was.

It's also worth noting it looks like a lot of borrowers have already started making payments. The Treasury Department tracks cash deposits made by all the federal agencies, including the Education Department. And in September, A, Ed deposited at least $6.7 billion. Now, not all that money is coming from student loan payments, but a lot of it is. And that's more than three times what the department deposited in July.

MARTÍNEZ: You have done a lot of reporting about the support system for borrowers and how it's pretty stressed. Have things gotten any better?

TURNER: Not yet. The handful of student loan servicing companies that manage borrowers' accounts and answer their questions are just flooded with calls. They've been slow to staff up, in part because of Education Department budget cuts.

I got access to some internal data that shows exactly what's happening behind the scenes right now. I just want to share a little bit of it, A. So one day recently, two servicers made borrowers wait on the phone an average of an hour. But I can also tell you in that same day, servicers had to field nearly 100,000 phone calls. That is an enormous number of phone calls. And as a result, roughly half of those borrowers hung up before they got through.

As a result, on Friday, attorneys general from 18 states, plus Washington, D.C., sent a letter to President Biden saying, quote, "at this critical moment, the Department of Education itself appears to lack sufficient resources to provide needed assistance to borrowers, meaningful oversight of servicers and enforcement of borrower protections."

MARTÍNEZ: Wow. That's, at least, annoying to almost everyone, I'm sure. What needs to happen, though...


MARTÍNEZ: ...To make this better for borrowers?

TURNER: Yeah. I mean, more money from Congress would help. But given what Sue just told us, who knows how possible that is? Meanwhile, the Education Department is encouraging borrowers to try to answer their questions online first. Borrower advocates are quick to blame the servicers, saying they waited too long to staff up and have not been acting in good faith. But if you ask the servicers, they say they're being asked to handle exponentially more borrowers than usual at the same time that the Education Department has cut their funding.

The largest servicer, Nelnet, told me they are hopeful. They have hundreds of new call center workers now moving through the security clearance process and should be ready soon. Though, obviously, that's cold comfort for all the borrowers I mentioned who called last week and gave up trying to reach a human. You know, A, the one thing that all sides agree on at this point - at least quietly behind the scenes - is that this has been a struggle, and it is not clear how much longer it will stay a struggle.

MARTÍNEZ: You can find all of NPR's Cory Turner's recent student loan reporting at Cory, thanks.

TURNER: You're welcome, A. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

A Martínez
A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.
Cory Turner reports and edits for the NPR Ed team. He's helped lead several of the team's signature reporting projects, including "The Truth About America's Graduation Rate" (2015), the groundbreaking "School Money" series (2016), "Raising Kings: A Year Of Love And Struggle At Ron Brown College Prep" (2017), and the NPR Life Kit parenting podcast with Sesame Workshop (2019). His year-long investigation with NPR's Chris Arnold, "The Trouble With TEACH Grants" (2018), led the U.S. Department of Education to change the rules of a troubled federal grant program that had unfairly hurt thousands of teachers.