Biden administration says the pause in federal student loan payments since March 2020 may end sooner.
Almost 45 million Americans have student debt and are likely to resume payments before the fall of this year. The White House proposed a plan to cancel up to $20,000 in federal student loans per borrower. However, the plan faces legal challenges from lenders and some state legislators. The resumption of repaying loans will depend on the Supreme Court’s decision on student loan forgiveness. They are expected to rule by June 30, 2023.
Experts advise borrowers to prepare for the possibility of resumption of student loan payments. (Photo: NBC News)
Also Read: Student Loan Debt in the Balance: The Supreme Court Considers the Fate of Loan Forgiveness Programs
If the court supports the plan, the Department of Education will implement the debt relief program and may extend the payment pause. However, if the court rejects the plan, the payment will restart 60 days later or 60 days after June 30. The Department also says it will notify borrowers before the resumption of payments and provide assistance in applying for deferment or forbearance and enrolling in income-driven repayment plans for those facing financial hardship.
What to Expect Ahead
Experts advise borrowers to prepare for the possibility of resuming payment for a student loan this summer or fall. Borrowers should review their interest rates, loan balances, and repayment options. They also recommend borrowers, contact their loan services and update their contact information and payment references.
Borrowers may benefit from refinancing their loans with private lenders, especially when they get lower interest rates or better terms. However, borrowers should be aware of the possible consequences, such as losing access to federal protections and benefits.
Also Read: Expect More Student Loan Forgiveness From Biden’s Education Department After Its Success in 2022
