Student loan payments restart due to debt limit deal.

Biden Administration to Resume Federal Student Loan Payments by End of Summer

Millions of Americans will have to start repaying their federal student loans with added interest by the end of the summer, according to reports. This comes after President Biden and House Speaker Kevin McCarthy reached an agreement to raise the country’s debt ceiling. The current moratorium on interest and monthly payments will end after August 30th.

The Supreme Court has not yet decided on the viability of last year’s proposal to cancel student debt, which would allow for a maximum $20,000 loan forgiveness per borrower. Activists and young adults who are hoping to have their student loan debt reduced have argued that payments should be suspended until the Biden administration fulfills its commitment to cancel student loans as promised last year.

Under the debt ceiling agreement, the Biden administration’s repeated extensions of the payment suspension would be off the table. The measure would make it unlawful for the Secretary of Education to use “any authority to implement an extension” of the current moratorium on interest and principal payments on federal student loans.

What Does the Agreement Mean for Borrowers?

• Payments would begin 60 days after a court ruling or on June 30th, whichever occurred first, according to the Education Department.
• The Education Department has been planning for the resumed payments this fall, and Education Secretary Miguel Cardona recently stated publicly that he was committed to that timeframe.
• The deal shields the administration’s plans to grant borrowers a grace period or further payment flexibility as it restarts repayment by failing to present how or when precisely the Education Department must resume collecting payments.

“President Biden protected the student debt relief plan in its entirety,” said White House spokesperson Abdullah Hasan in a statement. “The Administration announced back in November that the current student loan payment pause would end this summer — this agreement makes no changes to that plan.”

Despite Republican efforts to end targeted student debt relief and move up the planned end to the payment pause, Education Secretary Miguel Cardona has assured a smooth return to the repayment process. The deal also protects the administration’s ability to pause student loan payments should that be necessary in future emergencies.

“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,” said Cardona.

The House is expected to vote on the agreement on Wednesday, prior to the June 5th default deadline established by Treasury Secretary Janet Yellen. Senate Majority Leader Chuck Schumer has advised senators to get ready for potential votes the following weekend.

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