BREAKING NEWS: Get Ready To Repay Your Federal Student Loans
The student loan payment pause is officially coming to an end this summer. Federal Direct loans have been set to 0% interest with no payments due since March 2020. This administrative forbearance has been extended numerous times. The last couple have been stated as the “final” extension, but this time the payment pause really is coming to an end. The Fiscal Responsibility Act of 2023, often referred to as the debt ceiling bill, has been signed into law on June 3, 2023 by President Biden and includes a requirement for federal student loans to resume interest accrual and repayment 60 days after June 30, 2023.
This timing is what was already announced back in November 2022. However, the final payment pause was tied to the Supreme Court decision on President Biden’s one-time debt relief. We are still awaiting the Supreme Court decision sometime this month, and there was some chatter about whether or not the payment pause would be extended again if the one-time debt relief is struck down. This is no longer a possibility. Borrowers who owe less than $20,000 or $10,000 should not assume this debt is going to be forgiven. Look out for the Supreme Court decision and in the meantime, prepare to go into repayment on these loans. Not only will borrowers who have had 3 and a half years of payment relief need to prepare for repayment again, but graduates from 2020 to 2023 will need to plan to start paying their loans for the first time.
When will the first payments be due?
- Interest is set to begin September 1 and monthly payments will be due starting October 2023. Servicers are required to notify borrowers of their payment amount at least 21 days prior to the due date.