SAN FRANCISCO (KCBS RADIO) – Despite the Supreme Court still deciding what to do with President Joe Biden’s student loan forgiveness plan, payments are set to begin again after nearly three and a half years of being paused.
While Congress’s Fiscal Responsibility Act extended the debt ceiling into 2025, it also prevented further extensions of the payment pause initially put in place in March 2020.
For more, stream KCBS Radio now.
Speaker Kevin McCarthy shared after negotiations with Biden that restarting payments was part of the deal.
Now, borrowers will see their payments be due once again in October of this year, with student loan interest starting on Sept. 1, 2023.
“We will notify borrowers well before payments restart,” StudentAid.gov says on its website.
For many, it has been some time, or for those who have recently graduated, it’s completely new, and StudentAid.gov shares that there are several ways for borrowers to repay their loans.
“Federal student loans offer flexible repayment plans, loan consolidation, forgiveness programs, and more,” the site says. “We can help you manage repayment and answer any questions you have along the way.”
Still, some worries remain.
To discuss how the restarting of payments will affect students going forward, Mike Pierce, the executive director at the Student Borrower Protection Center, joined KCBS Radio.
“Folks should expect to start hearing from their student loan company about a student loan bill likely to be due in October,” Pierce said.
However, Pierce notes that “some big question marks” remain when it comes to who exactly is going to have to start paying again in October.
“There is a lot of flexibility here about who has to pay, how much they have to pay when those bills are going to be due, and we’re still watching to see what the Supreme Court does with the President’s promise to cancel student debt.”
Pierce says that one of the biggest question marks remaining is exactly how much people’s bills will be once they get them again this fall.
With the president promising to implement a new payment plan that not only cuts student loan bills in half but is based on income, the kind of payment plans that will be available remains to be seen.
For those concerned about not being able to make their payments, Pierce says that it appears the administration is putting together a “robust safety net” to protect them from any harm if they aren’t able to pay.
“They’re not going to get their credit damaged. They’re going to have time to figure out how to make ends meet,” Pierce says.
However, Pierce notes that this is still going to be hard for many.
“None of this is a good substitute for a universal payment pause. This is going to be hard for folks, and it’s going to put a lot of working families in a really tight spot,” Pierce said. “But, the Biden administration has said they’re committed to making sure that the worst consequences of missing payments don’t hit people the hardest.”
Pierce says that the Biden administration and the Department of Education are expected to announce further guidelines for the repayment process later this summer and that borrowers should keep an eye out for contact from their lenders.
Related
Related
DOWNLOAD the Audacy App
SIGN UP and follow KCBS Radio