Student loan pause update: Debt limit deal formalizes end date

WASHINGTON — After years in effect, the pause on federal student loan repayments is set to end soon. 

But after eight extensions under two administrations — and the Supreme Court still deciding on President Joe Biden’s broader student loan forgiveness plan — many borrowers are left scratching their heads at where things stand. 

Read on for an overview of the pause, the student loan forgiveness plan, and when you can expect to start making payments again. 

The Biden administration had said since November that the moratorium will extend until 60 days after the Supreme Court rules on the president’s student loan forgiveness plan, which would waive $10,000 to $20,000 in debt for most borrowers. If the lawsuit has not been resolved by June 30, payments would resume 60 days after that. 

Reinforcing that second option is the deal Biden and House Speaker Kevin McCarthy, a Republican, negotiated to raise the nation’s debt limit and avoid a federal default. While the GOP proposal to rescind Biden’s student loan forgiveness plan failed to make it into the package, the president agreed to put an end to the pause on student loan repayment. 

The package, which still needs approval from Congress, would also end the pause 60 days after June 30 — requiring the government to resume collecting federal student loan payments and interest in the final days of August.

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It’s a fair question — the pause on student loan repayments has been extended eight times under two administrations since former President Donald Trump established it using executive authority in March 2020. 

However, the most recent extension is expected to be the last one. Biden and McCarthy’s debt ceiling deal would prohibit the Secretary of Education from using 
“any authority to implement an extension” of the pause, blocking the administration from reversing course. 

Education Secretary Miguel Cardona praised the deal on Twitter Sunday for keeping the student loan forgiveness plan off the chopping book as Republicans pushed for spending cuts. 

“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,” he wrote. “The deal also protects our ability to pause student loan payments should that be necessary in future emergencies.”

Politico reports that the Education Department could still plan to offer some form of flexibility as payments resume, like a grace period during which borrowers aren’t penalized for missing payments. 

We don’t know exactly when the decision will come down, but it’ll likely be in the next month. 

The Supreme Court justices are finished hearing arguments for the term, and they usually finish their work issuing decisions by the end of June before taking a summer break. While the court’s pace has been unusually slow this term, Justice Brett Kavanaugh said back in January he was “confident they’ll all be out by the end of June.” 

The Associated Press contributed to this report.