Federal student loan payments have been on pause since March 2020. But that will change soon.
The U.S. Department of Education, which oversees a $1.6 trillion portfolio in federal student loan debt owed by about 43 million Americans, has posted a notice at the top of its student aid website confirming when borrowers should start paying their bills again.
According to the notice, interest will kick in starting Sept. 1, but borrowers won’t need to make payments until October.
“Congress recently passed a law preventing further extensions of the payment pause,” the department stated. “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.”
The pause on federal student loan payments and the accumulation of interest was first ordered by then-President Donald Trump at the onset of the COVID-19 pandemic in an effort to ease the financial pressure Americans were facing. It has since been extended many times by both the Trump and Biden administrations.
As part of the recent bipartisan deal that suspended the U.S. government’s borrowing limit, the Biden administration is prohibited from extending the pause again.
There has been some confusion over exactly when student loan payments would resume. The Biden administration previously stated that the payment freeze would end either 60 days after the U.S. Supreme Court issued a decision on the so-called forgiveness plan or 60 days after June 30, whichever came first.
The debt-ceiling deal, which gained final approval from Congress earlier this month, mandates that the student loan payments restart 60 days after June 30, or Aug. 29.
The June 13 clarification also comes as the U.S. Supreme Court considers whether to give its blessing to the Biden administration’s attempt to “forgive” hundreds of billions of dollars of debt.
At the core of the legal challenge is the question of whether President Joe Biden has the authority to implement his $400 billion plan, which would erase up to $10,000 in student loan debt for every borrower who earns less than $125,000 per year while canceling up to $20,000 for each Pell Grant recipient who meets that income standard.
By Bill Pan
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