Student Loan Payments Resume No Later Than Sep. 2023

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Stanley Tate

#1 Student Loan Lawyer

Updated on November 23, 2022

Following legal battles that blocked the president’s plan to cancel up to $20 thousand in debt for millions of federal student loan borrowers, the Biden administration hit the pause button on student loan payments and interest accrual.

Monthly payments were set to resume on Jan. 1 for millions of Americans. But after Republican-led legal challenges temporarily halted President Joe Biden’s plan to wipe out to $10 thousand in student loan debt for most borrowers, and $20 thousand for Pell grant recipients, the White House chose to delay ending the forbearance.

According to an announcement from U.S. Department of Education Secretary Miguel Cardona, payments will start back either:

  • 60 days after the court cases have been resolved, or

  • If the cases are still pending by June 30, payments will start 60 days later (Sep. 2023).

This is the ninth time the payment moratorium has been extended. President Trump first paused federal student loan payments when the coronavirus pandemic hit the US in March 2020 and crippled the economy. Since taking office, President Biden has extended the relief six more times.

The indefinite start date will likely cause problems for borrowers — especially those who’ve had to tighten their budgets amid rising inflation costs. How do you plan for payments when the start date is unknown?

There is an upside, though. The Education Department and student loan servicers may be able to finish processing paperwork for its two other big initiatives — the PSLF Waiver and the IDR Waiver — before the student loan payment pause ends. Hundreds of thousands of eligible borrowers may leave 2023 free from student loans.

Payment Pause Benefits

Will student loan payments be paused again?

The federal government is unlikely to pause student loan payments again after extending the forbearance until next summer. By then, the legal challenges that have temporarily halted the Education Department from delivering on the President’s plan to cancel up to $20 thousand in student debt for millions of Americans should be resolved.

The most recent payment pause is the latest chapter in the contentious policy of broad student loan relief. The Biden administration says that targeted debt cancellation will deliver economic relief and racial justice to millions of Americans. But critics argue that the loan forgiveness plan is an unfair giveaway that will fuel inflation and push the economy deeper into a recession.

Related: Who Do You Contact If You Have Questions About Repayment Plans?

“We’re extending the payment pause because it would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests,” Education Secretary Miguel Cardona said in a statement. ”

Student loan forgiveness initiatives available in 2023

The Education Department recently unveiled several new initiatives that all aim to ensure that student loan borrowers aren’t left in a worse position than when the pandemic started.

  • The IDR Waiver & Account Adjustment is expected to wipe out billions of dollars in student debt for borrowers who’ve been in student loan repayment for at least two decades.

  • The Public Service Loan Forgiveness Program’s rules were updated to allow full-time government and nonprofit employees to receive credit for late, piecemeal, and lump sum payments.

  • The Student Loan Fresh Start Program will allow borrowers with defaulted student loans to bring their accounts current by entering into a repayment agreement. Read more about the Student Loan Fresh Start Program.

  • Limiting most cases of interest capitalization, a move that adds unpaid interest to the borrower’s loan balance.

The Biden administration is also working on a new, potentially more affordable income-driven repayment plan that, if implemented, would cut the amount borrowers must pay for their undergraduate loans in half, from 10% to 5% of discretionary income.

UP NEXT: Student Loan Forgiveness 2022: Who Qualifies

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