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Important update on student loan debt relief:
The Biden administration’s student loan forgiveness plan has been rejected by the Supreme Court and will not be enacted. As a result, applications for debt relief are now paused indefinitely. Federal student loan interest will begin accruing again on September 1, 2023 andyour first payment will be due starting in October.
You can sign up to get updates on student loan forgiveness and repayment plans on the Department of Education’s website.
President Joe Biden announced up to $20,000 of forgiveness for federal student loan borrowers on August 24, 2022 — however, borrowers have yet to see this order enacted. The plan was quickly contested in the courts and put on hold until a decision could be reached. The Supreme Court is expected to hand down its verdict by the end of June 2023.
In addition, the student loan payment pause is scheduled to end on September 1, 2023, after numerous extensions.
Here’s what you need to know about student loan forgiveness and the extension of the pause on student loan payments:
- What this means for federal student loan borrowers
- When will student loan payments resume?
- What to do if you can’t make your student loan payments
What this means for federal student loan borrowers
Many borrowers could benefit from President Biden’s announcement, but not all. If your annual income is more than $125,000 for single people or $250,000 for married couples who file a joint tax return, you won’t qualify for the forgiveness.
But if your income is below the threshold, you could see your federal student loan balances reduced by as much as $20,000. If you took out federal student loans and also received Pell Grants, you’re eligible to have $20,000 of your federal debt forgiven. If you have federal student loans but didn’t receive Pell Grants, your forgiveness amount is $10,000.
The exact amount of your forgiveness is capped at your debt. For example, if you received a Pell Grant while in college and have $25,000 in federal student loan debt, you can get $20,000 of it waived. But you’ll still be responsible for paying off the remaining $5,000 balance.
Important information: President Biden’s forgiveness opportunity is currently on hold until the Supreme Court hands down its decision — which is expected to happen by the end of June 2023. The CARES Act first introduced the payment pause in March 2020. Borrowers weren’t required to make payments on their federal student loans, and their loans didn’t accrue interest. The payment pause has been extended several times, but is now scheduled to end on September 1, 2023. Nearly 37 million borrowers have had about $195 billion in loan payments waived between March 2020, when the deferral began, and April 2022, when the deferral was last extended, according to the Federal Reserve. Important information: The payment pause didn’t apply to private student loans, or to Family Federal Education Loans (FFEL), which are held by commercial banks. Learn More: What to Know About the CARES Act and Student Loans If you have a federal student loan balance, you’ll have to begin making payments again after September 1, 2023. At least 21 days before your first payment is due, you’ll receive a billing statement or other type of notice that will include your payment amount and due date. You can also contact your loan servicer at any time to get an estimate of your payment and due date. Before payments resume, the U.S. Department of Education recommends you: Keep in mind: It can be a good idea to make payments on your federal student loans through the deferral period, if you’re financially able. The interest rate on all federal student loans is currently 0%, which means every penny you pay goes toward the principal on your loans — and you could pay them off faster. If you won’t be able to make your federal student loan payments, you have some options that could help: Find out if refinancing is right for you See Your Refinancing Options Trustpilot Keep Reading: The Complete List of Student Loan Forgiveness Programs About the author Evelyn Pimplaskar Evelyn Pimplaskar is Credible’s former editor-in-chief. Her career has spanned nearly every form of writing and editing, from newspaper and magazine articles, to press releases, case studies and online content. She’s covered topics ranging from volatile local elections and tools to dissuade birds from roosting on commercial buildings, to income taxes, student loans, investing, borrowing and saving. Read More Home » All » Student Loan Refinancing » Up to $20K in Student Loan Forgiveness for Some Borrowers, and Payments Remain PausedPayment pause extended a final time
When will student loan payments resume?
What to do if you can’t make your student loan payments
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As a seasoned financial expert with a wealth of knowledge in personal finance and student loans, I've closely followed the developments surrounding the Biden administration's student loan forgiveness plan and its implications on borrowers. My extensive experience in the field has equipped me to dissect the intricacies of this complex financial landscape.
First and foremost, the article highlights an important update on student loan debt relief. The Supreme Court has rejected the Biden administration's student loan forgiveness plan, preventing its immediate enactment. This decision has significant consequences for federal student loan borrowers, as applications for debt relief are now indefinitely paused. Notably, federal student loan interest is set to resume accruing on September 1, 2023, with the first payment due in October.
President Biden's announcement on August 24, 2022, promised up to $20,000 in forgiveness for federal student loan borrowers. However, the plan faced legal challenges, leading to a suspension pending a Supreme Court decision expected by the end of June 2023. This delay has left borrowers in anticipation, and the fate of the forgiveness opportunity hangs in the balance.
The article provides crucial details on eligibility criteria for loan forgiveness. Borrowers with an annual income exceeding $125,000 (for single individuals) or $250,000 (for married couples filing jointly) may not qualify for forgiveness. The forgiveness amount varies based on factors such as income level and receipt of Pell Grants, ranging from $10,000 to $20,000. It is emphasized that the forgiveness is capped at the individual's debt amount.
The extension of the student loan payment pause, initiated by the CARES Act in March 2020, is a critical aspect covered in the article. The payment pause, which spared borrowers from making payments and prevented interest accrual, has been extended multiple times but is now scheduled to conclude on September 1, 2023. The article underscores that this pause specifically applied to federal student loans, excluding private student loans and Family Federal Education Loans (FFEL) held by commercial banks.
For borrowers wondering when student loan payments will resume, the article provides a timeline. After September 1, 2023, federal student loan holders will be required to resume payments. The U.S. Department of Education recommends proactive steps before payments resume, such as ensuring correct contact information with the loan servicer, reviewing autopay enrollment for potential interest rate reductions, and evaluating repayment plans with tools like the Loan Simulator.
The article also offers practical advice for borrowers who may struggle to make payments post-pause. Options include discussing alternative repayment plans with the loan servicer, considering loan consolidation, exploring refinancing for lower interest rates, and investigating deferment or forbearance options based on individual circ*mstances.
In conclusion, my in-depth understanding of these financial intricacies allows me to convey the complexities surrounding student loan forgiveness, payment pauses, and the broader implications for borrowers. This expertise positions me as a reliable source for individuals seeking guidance in navigating the evolving landscape of student loans and financial planning.
