In November of last year, the US Department of Education extended the moratorium on student loan payments, interest, and collections until June 30, 2023.
However, if the courts do not reach a final decision on debt forgiveness by the aforementioned date, payments will begin two months later.
Student Loan Payments
“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations, and it’s just plain wrong,” said Miguel Cardona, the US Secretary of Education.
As a result of these difficulties, the Education Department extended the repayment pause again in late November. Federal student loan bills will be due again 60 days after the litigation over its student loan forgiveness plan is resolved and it can begin wiping away the debt.
However, if the Biden administration is still defending its program in court by the end of June, or if it is unable to move through with student debt forgiveness by then, payments will resume at the end of August.
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Supreme Court To Resume Hearing About Biden’s Proposal
Meanwhile, the Supreme Court is expected to begin hearing arguments on the US government’s proposal at the end of this month. According to higher education analyst Mark Kantrowitz, repayments might resume as soon as May, depending on the court’s decision.
“If the court issues a ruling a few weeks after the February 28 hearing, repayment could restart in May or June,” Kantrowitz said.
The United States Department of Education announced in November that up to 26 million people could be eligible for debt relief, with more than half of them already authorized. The only thing preventing them from releasing loan debt and accepting new applications are court restrictions.
If borrowers fall behind on their student loans, the federal government has exceptional collection tools, including the ability to confiscate their tax refunds, earnings, and Social Security benefits.
The Education Department, on the other hand, has stated that it will not resume collecting activity during the extended payment freeze.
Borrowers in default on their student loans should also look into the recently announced “Fresh Start” initiative, which would allow them to return to their current position.
With headlines warning of a possible recession and unemployment increasing in some industries, experts advise borrowers to save the money they’d normally put toward their student debt each month.
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