Federal student debt relief to end in October

Photo | SHNS Massachusetts Attorney General Maura Healey

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By Katie Lannan from State House News Service

A pause on federal student debt payments is slated to lapse on Oct. 1, and a new team within Attorney General Maura Healey's office is preparing for any confusion and questions borrowers might face after the relief program ends.

A state law that took effect July 1 codified a "student loan borrower bill of rights" in Massachusetts, including the establishment of a student loan ombudsman within Healey's office to field and help resolve borrowers' complaints.

Three months before most federal student loan payments are set to resume after the COVID-related freeze expires, Healey announced July 1 that she had tapped Arwen Thoman, the deputy director of her insurance and financial services division, to fill the new ombudsman role, with Erica Harmon serving as deputy ombudsman.

"This could not be more timely, right," Healey said Thursday during a Facebook Live discussion with Sen. Eric Lesser. "A bunch of people who are going to all of a sudden be hit with this reality are going to be looking for relief and information and resources on how to deal with it, because of course any number of people have been out of work, too, during this time, which also affects their ability to pay."

Healey said her office's goal will be "communicating information to the public, making sure they have the number for our student loan ombudsman office," adding that "we're staffed up and ready with the resources."

U.S. Sen. Elizabeth Warren, Senate Majority Leader Chuck Schumer, Congresswoman Ayanna Pressley and Connecticut Congressman Joe Courtney led a group of lawmakers last month in asking Biden to further extend the pause through at least next March. Sen. Ed Markey and Congressman James McGovern also signed that letter.

Pressley, Warren and Healey have also called for Biden to take executive action to cancel up to $50,000 in student debt.

"I am not in the camp of canceling all student loan debt, but I do think there are things we can do now that will have measurable, meaningful impacts on the lives of student loan borrowers here in our state and around the country, and I really think that we would be so much better for it," Healey said Thursday.

Aside from the ombudsman, the student loan bill of rights language -- included in an economic development law Gov. Charlie Baker signed in January -- calls for the state's Division of Banks to license student-loan servicers.

Lesser, a Longmeadow Democrat and the Senate sponsor of the bill on which the student-loan law is based, flagged an Aug. 4 hearing the division has scheduled on regulations around student-loan servicer licenses, unfair servicing practices and standards of conduct.

"We fully expect that the servicers are going to pose challenges to those regs," he said. "So we've got to make sure that the students and the borrowers and the families that are impacted by this have got their eyes open."