Yahoo FInance’s Kristin Myers and Ashley Harrington, federal advocacy director and senior counsel at the Center for Responsible Lending, discuss Trump’s new executive order on student loans.
KRISTIN MYERS: Well, the president signed an executive action continuing the suspension of student loan payments until the end of the year. So for more on this, we're joined now by Ashley Harrington, federal advocacy director and senior counsel at the Center for Responsible Lending. So Ashley, the president put a pause on student loan payments. That was originally introduced under the CARES Act. This means that 35 million people with federal student loans are not going to have to resume their payments until January of 2021. Is this a win or not?
ASHLEY HARRINGTON: So it's definitely helpful, but we actually still have a lot of questions about it, Kristin. So we know that the executive order directs the secretary to extend the suspension through the end of the year. However, back in March, before CARES was enacted, when the president also issued an executive order to suspend payments, borrowers had to actually opt in. It wasn't an automatic suspension as it is under CARE. So it's unclear whether this is going to be opt in, opt out.
There's also the issue of it doesn't do-- it doesn't speak to defaulting borrowers directly, who have experienced a halt on involuntary collections under CARES. So we're in a situation where come October 1, all the folks who were in default and struggling before the crisis, who are still struggling and struggling much more now, are going to be subject to wage garnishments and everything else, starting October 1.
And it still leaves out the 9 million borrowers who don't ha-- who have department-guaranteed loans, but not held loans, the FFEL borrowers and the Perkins borrowers, who are not actually owned by the department, who had loans not owned by the department. And there's the worry that under CARES, our payments count-- the suspension of payments even during those months counted towards IDR and PSLF.
However, the executive order doesn't mention that-- doesn't mention the PSLF program. So we're looking at a sit-- where teachers, who will-- if they have the department-held loans, could have their loan payments still suspended, but it wouldn't count towards PSLF, the front line workers who may have been counting it towards PSLF. So there's just a lot of open questions that we definitely need more direction from the department on.
KRISTIN MYERS: So to that end, when you have open questions, who is the one that comes up with the answers? You didn't get any of those from the president. Is it just the Department of Education that says, "OK, we have this executive order. Let's just try to figure it out, and perhaps use the CARES Act as a template or a guide"? I mean, so right now, it almost seems like we have no idea what's going to be happening come October, at least when it comes to our student loans and those payments.
ASHLEY HARRINGTON: Absolutely. We definitely need the Department of Education to say something. And I'm-- and that's not just borrowers. Servicers need that help as well. They are also confused by what's going on, and so we need directions for everyone involved. But, really, Kristin, what we need is, you know, our lawmakers to get back to the table and create a comprehensive relief package that does include student debt relief for all borrowers.
The House passed Heroes back in May. It had the continuation of suspension of payments all the way through September 2021. It covered the left-out borrowers, to FFEL borrowers and Perkins borrowers who weren't included. It even had debt relief for private student loan borrowers. And it had $10,000 of cancellation for some borrowers.
So there was a lot more in there, and it just gave folks a lot more clarity. They knew what to expect, borrowers and services alike. So we need the department to give more guidance, but we also need congressional action on student debt and other issues that are facing families and consumers during this crisis.
KRISTIN MYERS: So currently, the student loan debt crisis is up over $1.5 trillion-- I believe it was $1.6 trillion last time I checked.
ASHLEY HARRINGTON: 1.7 now.
KRISTIN MYERS: Oh, 1-- oh, OK. Well, that's even worse.
ASHLEY HARRINGTON: I know.
KRISTIN MYERS: $1.7 trillion right now. Without any form of specific legislation, how do you think this is going to impact that?
ASHLEY HARRINGTON: I think that-- I think we're seeing-- we've already been seeing student debt grow. It's only going to get worse, because we are in such a precarious situation economically. Some of the borrowers were already struggling pre-crisis. Before we even got here, two in five borrowers were in default or seriously delinquent, and it was worse for Black and brown borrowers.
And the economy hasn't gotten better. We don't know when it might get better. Folks are still facing long-term unemployment. There are wages that will never be made up. We're also facing a massive rental housing crisis. And these are going to be-- there's going to be so much overlap between these populations.
So I don't think this is going to get better unless we take bold steps, including actual debt cancellation. Balances have to come down. If we leave this crisis and we're still at $1.7 trillion for 45 million borrowers, that is a serious drain not just on their resources, but the entire economy.
KRISTIN MYERS: So to that end, I also want to ask you, as you mentioned, rentals-- there had obviously been a moratorium on evictions that, of course, expired when the CARES Act expired. Are you concerned about a rising number of folks that are going to be left homeless going forward?
ASHLEY HARRINGTON: Yeah. We're-- 30 to 40 million folks are looking at losing their housing. That's a concern for all of us. We're talking about, right now, $25 billion in back-owed rent that will get-- that is set to approach $70 billion by the end of the year. And this is, again, when we still have high unemployment. Wages are never going to be regained. This is a major problem.
And so we're going to have a homelessness crisis in the midst of a public health and economic crisis. And that just-- and all of these issues are going to compound on each other. So that's why we really need Congress to step up. And when you look at the president's executive order on rent-- on the rental crisis, it actually, really, does nothing.
It just directs HUD to look for money. Basically, you know, look under the couch cushions, see if you can find some extra money, and then think about how we could use it. Not even then once you find it, use it. Just, you know, think about it, figure out something. And so that's no help or relief for those 30 to 40 million people, who are facing literal homelessness, literally losing their homes in the face of what-- in this crazy-- during this time of public health issues, economic issues, everything like that.
KRISTIN MYERS: All right. Well, we will have to leave that there. Ashley Harrington, federal advocacy director and senior counsel at the Center for Responsible Lending. Thanks for joining us.
ASHLEY HARRINGTON: Thanks so much.