The Education Department is sending out mass notices to borrowers with an update and reminder that the student loan pause has been extended.
Borrowers were previously notified that they would have to resume repayment on their student loans in January. But the latest extension could result in an additional six to eight months of relief.
Here’s what borrowers should know.
Student Loan Pause Extended to Summer 2023
Former President Trump originally enacted the student loan pause in March 2020 in response to the Covid-19 pandemic. The pause stopped student loan payments for government-held federal student loans, froze interest, and suspended collections efforts against borrowers in default.
Congress subsequently codified the relief through passage of the CARES Act, which provided six months of the student loan protections. But as the pandemic and economic fallout continued, Trump, and subsequently President Biden, issued several short-term extensions. The student loan pause is currently in its third year.
President Biden’s most recent extension of the pause was supposed to end on December 31. But with Biden’s signature one-time student loan forgiveness program blocked by federal courts, and the Supreme Court set to rule on the initiative next year, the administration extended the pause into 2023.
“You will NOT have to make your loan payments that would have been restarted in January,” the Education Department’s email tells borrowers. “Why are we extending the pause? Because earlier this year, the Biden-Harris Administration announced a student debt relief plan for working and middle-class borrowers. Millions of Americans applied and were found to be eligible for relief. But lawsuits challenged the program and froze our ability to finalize debt relief.”
The notice framed the student loan pause extension as a matter of fairness in light of the ongoing legal fight over Biden’s student loan forgiveness plan. “While litigation is preventing us from providing the relief needed to avoid these harms, we don’t think it is right to ask borrowers to pay on loans they wouldn’t have to pay were it not for the lawsuits challenging the program,” said the department. “Millions of borrowers would be making payments they may not owe, or payments that are higher than they should be, under the Biden-Harris debt relief plan. That’s not fair.”
Republicans have blasted Biden for extending the student loan pause again. “President Biden’s sixth extension of the student loan repayment pause brings the total cost of this unjustifiable policy to $195 billion,” said Rep. Virginia Foxx (R-NC), incoming leader of the House Education and Labor Committee, in a floor speech last week. “This is foolish by every measure.”
Supreme Court to Hear Student Loan Forgiveness Arguments in February
Earlier this week, the Supreme Court scheduled a hearing for February 28, 2023 on two challenges to Biden’s student loan forgiveness program. The court will then issue a ruling in the subsequent months, likely by June.
“We are confident that our program is legal and have asked the Supreme Court to allow us to move forward with providing debt relief to tens of millions of eligible Americans,” said the Education Department in the mass email to borrowers. “The Supreme Court agreed to take our case and will hear arguments this February.”
The extended student loan pause “will end 60 days after the Supreme Court makes a decision on the case,” says the email. “If no decision has been made by June 30, 2023, payments will resume 60 days after that.”
Extended Student Loan Pause Retains Ongoing Benefits
All of the earlier features of the student loan pause will continue with Biden’s latest extension. This includes:
- No payments and no interest accrual on government-held federal student loans, including Direct loans and federally-administered FFELP loans.
- No collections efforts against borrowers with defaulted Direct and FFELP loans.
- The months of suspended payments will count towards student loan forgiveness under Income-Driven Repayment (IDR) plans for borrowers who are in those plans.
- The months of suspended payments will count towards student loan forgiveness under Public Service Loan Forgiveness (PSLF) for borrowers who meet all other program requirements, including having qualifying PSLF employment.
- Borrowers who made voluntary payments during the student loan pause can request a refund by contacting their student loan servicer.
The payment pause and interest suspension still does not apply to commercially-held FFELP loans or private student loans.
Further Student Loan Forgiveness Reading
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