The pandemic-relief policy suspending federal student loan payments has now been extended eight times and spanned nearly three years.
But it is still uncertain when will the payments actually resume.
When student loan payments restart depends on how long the Supreme Court justices take to issue a decision on the president’s plan.
In November, the U.S. Department of Education announced the latest extension to the payment pause on federal student loans, saying the bills would resume 60 days after the litigation over its student loan forgiveness plan resolves.
If the administration’s plan to forgive student debt faces legal challenges that are still unresolved by the end of June or is unable to proceed with the debt forgiveness plan, borrowers will need to resume their payments at the end of August.
Servicers will determine when your payment is due
Since March 2020, the U.S. government has suspended federal student loan payments due to the impact of the pandemic on the economy. Restarting the repayment of more than 40 million Americans’ loans will be a huge undertaking.
When a borrower will need to resume payments will depend on their loan servicer’s timeline, as not everyone’s payments will restart at the same time. It is likely that borrowers will be required to pay on the same day they did before the pandemic.
However, there is still a possibility of another extension of the payment pause, as the Education Department has extended the pause twice before, despite stating that it would be the final extension.
During the payment pause, the Education Department has stopped all collection activity, including wage and tax refund garnishment.
Supreme Court will decide loan forgiveness fate
Shortly after Biden announced his sweeping plan to cancel up to $20,000 in student debt for millions of Americans, a number of conservative groups and Republican-backed states attacked the policy in the courts.
The relief for student loan debt forgiveness has been halted temporarily by two successful lawsuits, which the Supreme Court has agreed to hear oral arguments for.
The high court justices should provide clarity and resolve the uncertainty surrounding loan forgiveness. If the plan is allowed to go through, around 20 million people could have their debt entirely wiped out according to a White House estimate.
The process to forgive student loan debt is expected to take 60 days, since forgiveness has already been approved for 16 million borrowers and the information just needs to be transmitted to loan servicers.
