The student-loan crisis is facing a shake-up — and lawmakers are worried Biden's Education Department isn't ready to handle it

• Biden is expected to carry out broad student-loan relief before payments resume September 1.
• That's less than two months away, and Democrats and the GOP have concerns about its implementation.

A lot is at stake for millions of federal-student-loan borrowers over the next few months.

From broad student-loan forgiveness to resuming student-loan payments after a two-year pause, borrowers are anxiously awaiting announcements of any relief — but lawmakers on both sides of the aisle have concerns about whether President Joe Biden's Education Department has the tools it needs to carry everything out effectively.

Education Secretary Miguel Cardona told reporters last month the department was prepared.

"We're ready to roll up our sleeves," he said, adding that the department had "been working nonstop" on student-debt relief.

Biden is considering $10,000 in student-loan forgiveness for borrowers making under $150,000 a year, The Washington Post reported, and he's likely to announce his final decision in July or August, close to when the student-loan-payment pause expires after August 31.

But with that date less than two months away, with no indication as to whether the pause will be extended, lawmakers and advocates are unsure all these actions can be carried out on such a short timeline.

"When it comes to preparedness, the Department of Education might as well be taking a page out of President Lyndon Johnson's weathered playbook: Hunker down like a jackass in a hailstorm. This comes as a surprise to no one," Rep. Virginia Foxx, a top Republican on the House's education committee, told Insider.

"Despite what the Secretary said, there has been zero effort to demonstrate that the Department is ready to implement anything," Foxx, who has frequently criticized student-loan relief, added. "When it comes to squandering hundreds of billions of taxpayer funds, I hope the department is at the very least willing to share that plan with the American people — the same people writing the checks."

An Education Department spokesperson told Insider that it was continuing to review options for broad relief and would communicate any plans directly with borrowers.

Borrowers were promised 'ample notice,' but the deadline is 6 weeks away

Student-loan borrowers have faced a lot of uncertainty during the pandemic. While Biden has extended the pause on student-loan payments four times during his presidency, the extensions were announced very close to the date payments were set to resume, giving borrowers little time to financially plan. Last month, Cardona assured borrowers any announcements of relief, or further extensions, would be done well in advance.

"I don't have any information now to share with you about when it would end," Cardona told lawmakers last month, referring to the student-loan-payment pause. "I know we have a date, and it could be that it's extended. Or it could be that it starts there. But what I will say is that our borrowers will have ample notice. And we'll communicate that with you as well."

While he didn't specify what he meant by "ample notice," some might disagree that announcing any plans less than two months before payments resume counts as "ample."

Rep. Ilhan Omar of Minnesota led 55 of her Democratic colleagues last month in sending a letter to Cardona requesting information on his department's preparedness to implement broad student-loan forgiveness "quickly and efficiently," but Omar's office told Insider she had yet to receive a response.

Foxx sent a similar letter last month to Cardona, saying: "You said you are ready to act on student-loan forgiveness, but you can only be ready if you know the plan; therefore, please describe, what is this plan?"

Her office told Insider she had not received a response, either.

Rep. Alexandria Ocasio-Cortez of New York previously criticized the lack of notice the department had given student-loan borrowers, saying it inhibited many people from planning financially.

"I think some folks read these extensions as savvy politics, but I don't think those folks understand the panic and disorder it causes people to get so close to these deadlines just to extend the uncertainty," Ocasio-Cortez tweeted in April. "It doesn't have the effect people think it does."

Broad relief isn't the only thing on the department's plate

While the most pressing issues for student-loan borrowers right now might be broad student-loan forgiveness and a payment-pause extension, the Education Department has a lot more it's focusing on that could significantly affect many borrowers.

For example, the department announced reforms to the Public Service Loan Forgiveness Program last month, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments. Included in those reforms was a waiver running through October 31 that allows any prior payments, including those deemed ineligible, to count toward forgiveness progress.

But a recent analysis from the advocacy group Student Borrower Protection Center found that while 9 million public servants were eligible for student-loan forgiveness, only 2% of them had gotten their debt wiped out since November 2020 — and fewer than 15% had filed paperwork to track their PSLF progress.

Richard Cordray, the Federal Student Aid head, said during a conference last month that he's "pushing hard to get approval if we can get it extended," referring to the waiver, but that borrowers should plan for the waiver to expire in October.

Additionally, the department just released its list of regulatory proposals to reform the student-loan industry. Those proposals included reforms to loan-forgiveness programs like PSLF and ones for defrauded borrowers, as well as measures preventing interest capitalization. The department hopes to finalize those rules by November, with implementation next year.

On top of all those reforms, the department is overseeing the transfer of millions of borrowers' accounts to new student-loan servicers after three companies announced they would be ending their federal contracts. It's clear the department has a lot on its plate — and while Republicans want Biden to end the relief and return to pre-pandemic functions, advocates of relief want to ensure borrowers aren't thrown back into repayment too soon.

One hundred eighty student-loan advocacy groups recently wrote a letter to Biden, saying: "We strongly urge your administration not to threaten the financial security of people with student debt as a tactic to fight inflation."

They added: "People with student debt cannot be required to make payments toward loans your administration has promised to cancel."