What debt ceiling deal means for student loan payments

President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) reached a deal over Memorial Day weekend to suspend the nation’s debt ceiling into January 2025, an effort to avoid a potentially catastrophic default.

The proposed deal is now heading toward a House vote. Though some Republicans have expressed disappointment that the compromise falls short of the spending cuts they demanded, McCarthy insisted he would have the votes needed to pass the agreement. 

Several VERIFY readers asked what the proposed debt ceiling deal means for their student loans, including whether it will require the Biden administration to restart payments following a pause that’s been in place for more than three years.

Does the proposed debt ceiling deal require student loan payments to restart?

Yes, the proposed debt ceiling deal requires student loan payments to restart. 

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The proposed debt ceiling deal requires a set end date for the federal student loan payment pause that began on March 13, 2020. During the pause, student loan borrowers have not been required to make monthly payments and their loans have not accrued interest.

The debt ceiling deal, known as the Fiscal Responsibility Act of 2023, includes a provision that says Secretary of Education Miguel Cardona “may not use any authority to implement an extension” of the student loan payment pause. 

If Congress passes the agreement, the student loan payment pause will end 60 days after June 30, 2023, according to the bill’s text. 

“The agreement would codify that the repayment pause ends on August 30, 2023,” Michele Shepard, senior director of college affordability with The Institute for College Access and Success (TICAS), told VERIFY. 

It’s unclear exactly when borrowers would be required to make their first payments after the pause ends. The Department of Education says on its website that borrowers will receive a billing statement or other notice at least 21 days before the payment is due. Borrowers can also get an estimate of their payment amount and due date by contacting their loan servicer online or by phone, the department says. 

The Biden administration previously said the student loan repayment pause would be extended until June 30 or until legal challenges over the broader student debt relief plan are resolved – whichever is sooner. Student loan payments were set to restart 60 days after the pause ends in both cases.

“The Administration announced back in November that the current student loan payment pause would end this summer — this agreement makes no changes to that plan,” White House spokesperson Abdullah Hasan said in a statement. 

In the past, the administration has extended the pause after previously setting an end date. But the proposed debt ceiling agreement means that couldn’t happen, as it would codify into law the end date for the pause. 

While the debt ceiling deal requires an end to the student loan payment pause, it does not threaten the Biden administration’s student debt relief plan. 

The Biden administration’s proposed student debt relief plan would forgive between $10,000 and $20,000 of federal student loan debt for people with annual incomes of less than $125,000 for individual borrowers and less than $250,000 for households. 

The future of student debt relief is currently in the hands of the Supreme Court, which heard arguments in two cases challenging the plan in February. A decision from the Supreme Court on the plan is expected before the end of June. 

The Associated Press contributed to this report.