(CTN News) – Due to the widespread spread of the coronavirus, millions of Americans have postponed their federal student loan payments for almost three years.
Now that a settlement has been reached to prevent a default on the nation’s debt, payments will resume as usual. However, the president will continue to work towards his goal of loan cancellation.
Federal Student Loan Payment Pause to Expire Despite Debt Ceiling Agreement
The debt ceiling agreement reached over the weekend between the Biden administration and House Republicans includes a provision that ends the moratorium on student loan payments 60 days after June 30.
It also makes it so the Secretary of Education can’t put off collecting on federal student loans any longer unless Congress approves.
Even though the bill commits to ending the pause on student loan payments, the fate of the president’s broader student loan forgiveness plan still rests with the Supreme Court, White House Office of Management and Budget Director Shalanda Young clarified on Tuesday.
Even without the provision in the debt ceiling pact, the payment suspension was scheduled to end later this summer.
Since the beginning of the pandemic in the spring of 2020, over 43 million persons who have federal student loans have had their payments suspended and their interest rates lowered to zero. It has cost an estimated $195 billion since the halt began, or $5 billion every month, as the Committee for a Responsible Federal Budget reported.
The Department of Education announced the most recent extension of the moratorium on payments on student loans in November. It was the seventh time the suspension, initiated by President Trump, was extended by the Biden administration.
A ruling by the Supreme Court on the broader Biden administration student loan forgiveness scheme was expected to coincide with the conclusion of the suspension of federal student loan payments at the time.
The suspension would be lifted after sixty days if the idea were implemented. With no program in place by the 30th of June, payments would start 60 days later. The Department of Education has promised to give advance notice to debtors before collection efforts are resumed.
Despite Republican efforts in the House, the debt ceiling deal did not include a cut to the administration’s federal student loan forgiveness program.
Debate Surrounding Biden Administration’s Student Loan Forgiveness Plan Continues
Last year, the Biden administration announced student loan forgiveness of up to $20,000 for eligible Pell Grant recipients and $10,000 for qualified students with incomes below $125,000. However, six conservative states and two Texan borrowers disputed the proposal.
This matter has been before the Supreme Court since February, and a ruling is expected any day now. Six conservative justices on the court cast doubt on the Biden administration’s legal justification for the plan during oral arguments, suggesting they would rule to prohibit it.
On Monday, Young stated, “There’s nothing on that in this bill.” This refers to the forgiveness program. She added that the income-based repayment standards, which the Biden administration had proposed changing earlier this year, are safe under the debt ceiling agreement.