Over the three-year-long pause of student loan payments, the U.S. Department of Education has repeatedly told borrowers their bills were set to resume in the near future, only to take it back and provide more time.
In fact, the pause — first announced in 2020 when the pandemic hit the U.S. and crippled the economy — has been extended eight times.
However, this time around, the agency really means it.
Yesterday, the Education Department posted on its website that “payments will be due starting in October,” and a recent law passed by Congress will make changing that plan difficult.
This is likely to cause a big adjustment for borrowers come October. Around 40 million Americans — or 10% of the adult population — have debt from their education, and the typical monthly bill is about $350.
Thus, the impact on consumer spending (and retailers) could be substantial.
Why is the Student Loan Repayment Pause Coming to an End?
The Education Department notes on its financial aid website that “Congress recently passed a law preventing further extensions of the payment pause.”
This is referring to the agreement reached between both political parties to raise the nation’s debt ceiling, which President Biden signed into law in early June.
In exchange for voting to increase the borrowing limit, Republicans demanded large cuts to federal spending. They sought to repeal Biden’s executive action granting student loan forgiveness, but the Biden administration refused to agree to that. However, included in the deal was a provision that officially terminates the pause at the end of August.
What Borrowers Need to Know
The Education Department says borrowers will be expected to make their first post-pause payment in October. Meanwhile, interest will start accumulating on borrowers’ debt again on Sept. 1.
Exact payment due dates will vary based on your account details.
What About The Student Loan Debt Relief Plan?
As millions of Americans prepare themselves to restart their student loan payments, there’s one big issue: Most borrowers don’t know the exact amount they’ll owe. That’s because the Supreme Court has yet to issue a verdict on the validity of President Biden’s Student Loan Debt Relief Plan, which could cancel up to $20,000 in student debt for qualified borrowers.
Though, a decision is expected this month.
Related: Student Loan Forgiveness FAQs
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