Student loan payments will resume this fall after a pause of over three years, according to an announcement from the U.S. Department of Education.
“Congress recently passed a law preventing further extensions of the payment pause. Student loan interest will resume starting on Sept. 1, 2023, and payments will be due starting in October. We will notify borrowers well before payments restart,” a statement appearing on the federal student aid website reads.
In response to the COVID-19 pandemic, federal student loan repayment and interest accrual were frozen in March 2020 by the Biden administration through the CARES Act.
This freeze was extended eight times, but its end was one of the conditions outlined in the recent deal reached by Biden and House Speaker Kevin McCarthy (R-CA) to raise the debt ceiling.
As The Dallas Express reported, the debt ceiling bill was signed just two days before the federal government would apparently have gone into default. The legislation was subject to heavy debate, and several concessions were made on all sides.
Once outstanding federal student loan repayment restarts, some Americans might be under increased financial stress.
As The Dallas Express previously covered, the outstanding federal student loan balance was $1.635 trillion as of April 1, with borrowers facing an average student loan balance of about $37,328.
Some borrowers face financial difficulties exacerbated by last year’s inflation and recent interest rate increases. Lessened job security in light of increasingly widespread layoffs has also added to financial stress.
Last year, the Biden administration approved student loan cancelation for specific borrowers to the tune of $400 billion, as The Dallas Express reported.
Borrowers earning less than $125,000 a year or $250,000 if married would qualify for up to $10,000 in debt relief, while recipients of Pell Grants would be eligible for up to $20,000.
Yet the student debt relief plan has faced substantial pushback in a sharply politicized debate, with attorneys general from Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina filing suit in federal court against Biden and Secretary of Education Miguel Cardona last September, as The Dallas Express previously covered.
The Supreme Court is expected to reach a final decision on the student debt relief plan in late June or July. Yet early indicators have pointed to the high court’s majority being unfavorable to the proposal, as The Dallas Express reported.
Holders of federal student loans should receive information about repayment in the coming weeks, including payment options.
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