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Student Loan Repayments Will Resume After August As Part Of Debt Limit Deal
The Biden administration’s pause on federal student loan repayments will end in late August as part of the debt ceiling deal that President Joe Biden and House Speaker Kevin McCarthy agreed to on Sunday, although the fate of the White House’s marquee student loan waiver program has been left to the Supreme Court.
KEY FACTS
The pause on federal student loan repayments will come to an end “sixty days after June 30, 2023,” according to the 99-page draft bill that outlines the debt ceiling deal.
The end of the pause means interest on student loans will also resume.
The deal also prohibits the Secretary of Education from using any authority to extend the pause unless “expressly authorized” by Congress.
The bill does not offer any details about how the loan payments will resume, but Politico reports that the Education Department expects borrowers to start making repayments in October.
The department has asked loan servicing companies to be ready to resume interest charging from September, the report added.
CRUCIAL QUOTE
In a statement, Education Secretary Miguel Cardona praised Biden for averting a crisis with the deal and “protecting our student debt relief plan in full.” He added: “Despite Republicans’ efforts to end targeted student debt relief and move up our planned end to the payment pause, we will ensure a smooth return to repayment process. The deal also protects our ability to pause student loan payments should that be necessary in future emergencies.”
KEY BACKGROUND
Biden and McCarthy reached a deal to end the impasse between Democrats and Republicans over raising the debt ceiling on Saturday. Ending the pause on repayments is part of the tentative deal, which will now have to be passed by Congress. Republicans have argued that Biden acted unconstitutionally in offering a waiver of between $10,000 to $20,000 for nearly all people with federal student loans and then placing a pause on all repayments. Appearing on Fox News Sunday, the House Speaker called the end of the pause a “victory” and claimed the resumption of repayments will bring in “$5 billion each month to the American public.” The deal, however, leaves Biden’s student loan waiver untouched in what appears to be a compromise from McCarthy. The fate of the waiver will now be decided by the Supreme Court, which is expected to make a ruling on the matter in June.
