The Latest on Student Loans

Two very important changes have come about recently which are important for student loan borrowers.  The first is that the U.S. Supreme Court ruled that President Biden’s student loan relief plan was not authorized under federal law.   The Biden Administration had proposed a relief plan which would have cancelled up to $10,000 in federal student loan debt for borrowers with income below a certain level (and up to $20,000 for borrowers who were income eligible and had also received a Pell grant). Due to the new ruling, borrowers will not receive the proposed debt forgiveness. 

The second important change is that the ‘payment pause’ which has been in effect for most federal student loans for the past 3 years will end at the end of August. This payment pause first went into effect in March 2020 due to financial hardships caused by the COVID pandemic.   Interest on federal student loans, which was also paused during the pandemic, will start to accrue again on September 1, 2023. Borrowers will start receiving billing statements for their un-paused student loans from their loan servicers by late August and the first payments will be due in October 2023. Borrowers who cannot afford their payments should apply for an Income Driven Repayment Plan (“IDR”s), which could substantially lower their monthly payments. In these plans, the monthly payment is based on the borrower’s income, so borrowers with little income may qualify for a very low monthly payment. Borrowers can apply for an IDR at the https://studentaid.gov/.

For further information about student loan repayment and to get updates about new developments we encourage readers to go to https://www.studentloanborrowerassistance.org/.

                                                                                                                                                                                As of 7.11.2023