BUFFALO, N.Y. (WBEN) The debt ceiling deal in Washington, that is in the final stages of passage, should be a wake up call to student loan borrowers.
"The pause of student loan repayments started in March of 2020," said
Jeff Boron of Send Your Kids to College. "It's been over three years. It's been
extended eight times."
The text of the debt limit bill prevents Education Secretary Miguel Cardona from extending the pause again.
The pause "shall cease to be effective" 60 days after June 30 according to the text.
That means student loan payments will restart around the end of August.
"It looks like this is final," said Boron. "Loans will start being paid back in early September. It was tied to the pandemic and toward people that lost their jobs and were not able to work and had no jobs. Those days are gone."
Boron is encouraging borrowers to contact their student loan provider if they
are unclear about how much they owe or what their payments are.
There is some concern about whether the process will go smoothly. Roughly 44 million people have federal student loans. Boron added that student loan providers are short staffed right now. In theory, he said they should be reaching out to borrowers. But he is not confident that will happen.
Attention will soon shift the the United States Supreme Court. Justices are deciding on President Biden's student loan forgiveness program. That decision is expected as the term wraps up this month.
The high court decision on loan forgiveness is expected before the pause ends on student loans.
"I'm expecting that forgiveness will not go through. Everything that I'm reading suggests that," noted Boron. "First, we have a Conservative Supreme Court which would tend to lean against forgiveness. Secondly, there's a question of whether or not the President had the executive authority to do
this and bypass congress."
It's expected the forgiveness could cost the country $400 billion dollars.
Boron said what we don't think about, is that we've already spent about half of that on the student loan pause. The student loan pause costs the country somewhere between 5 and 7 billion dollars a month.
