ICYMI: The pause on Federal Student Loan payments has been extended, once again, while President Biden’s Student Loan Forgiveness Executive Order plays out in court.
Read below for the history, what’s happening now, and when to expect those payments to resume.
History:
In March of 2020, the initial pause on Federal Student Loan payments was initiated under the Trump Administration as part of a Pandemic Relief package. The pause has been extended now a total of 9 times, reaching across another Administration under President Biden.
President Biden has extended the pause on payments 6 of the 9 times, including the latest that was announced on Tuesday, November 22. The (supposedly final) pause was set to expire on Jan 1, 2023. This was all set to be in conjunction with the announcement President Biden made last August, offering Federal Student Loan Forgiveness of $10k for borrower’s earning less than $125k/year and an additional $10k for Pell Grant borrowers in the same income bracket.
What’s Happening Now:
The Biden Administration has extended the Jan 1 pause on collecting payments, until the legal challenges against his Student Loan Forgiveness can play out in court. On 11/10/22 a Federal Judge in Texas rejected Biden’s Executive Order for the Student Loan Forgiveness plan and additionally 6 states (Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina) had already contested it themselves by taking legal action. (Their case was thrown out but they are in appeals.) Therefore, the legal cases against Student Loan Forgiveness are blocking the government from moving forward. The Biden Administration has now turned to the Supreme Court for a ruling. Therefore, the current Administration has extended the pause on any Federal Student Loan payments to occur within 60 days after the legalities regarding the Loan Forgiveness are resolved. *Specifically, if the situation is not rectified by June 30, 2023, payments will resume within 60 days after that date: Sept 1, 2023.
What’s Next:
Meanwhile, over 26M borrowers have applied for forgiveness and 16M have been approved. Court orders have blocked any debt cancellation from occurring and the Department of Education has ceased allowing any new applicants for that specific forgiveness during this time.
If you have already applied for the new forgiveness application, you’ll need to sit tight and see how this plays out.
If you have not applied yet, you will need to wait until the applications resume.
You can monitor the status of the situation here: https://studentaid.gov/ as well as sign up for updates here: https://www.ed.gov/subscriptions.
If you have been able to pay your student loans all along, congratulations! You’ve been making interest-free payments which will make a dent in your principal balance.
If you haven’t been paying on your loans and/or have any trepidation about the payments restarting (potentially, mid-2023 now) please check out your options and make sure you are on the best plan for your situation.
Help is here: https://freestudentloanadvice.org/
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