Student loan payments are set to resume three years after they were put on pause due to the COVID-19 pandemic.
Included in the last-minute bill to resolve the country's debt ceiling crisis is a provision that puts an end date on the loan pause. A return to normal student loan protocols will resume “60 days after June 30, 2023,” according to the Fiscal Responsibility Act.
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The debt limit plan terminates the suspension of federal payments and interest fees, requesting a full return to a pre-pandemic schedule starting around Sept. 1.
The House of Representatives voted in favor of the debt ceiling plan, which received bipartisan support, Wednesday night, and the Senate passed the bill Thursday evening. The measure now awaits President Joe Biden’s signature in what House Speaker Kevin McCarthy (R-CA) is calling a victory.
Student loan borrowers are set to receive a billing statement with the payment amount or other notice at least 21 days before the payment is due, according to the Office of Federal Student Aid. Students who were enrolled in an automatic payment plan before the pandemic will need to opt back in.
The Supreme Court is expected to decide on Biden v. Nebraska at the end of June, a case considering the passage of the president’s student loan forgiveness plan.
If the high court approves the Biden administration’s loan cancellation plan, student borrowers could see up to $20,000 of their balance forgiven. The plan would grant $10,000 in debt relief for single individuals with an income under $125,000. Married or joint-income borrowers with an income under $250,000 can also get $10,000 forgiven.
Borrowers who received Pell Grants, which is a federal grant program for low-income undergraduates, could get an additional $10,000 in debt relief.
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The Biden administration has extended the halt on student loan repayment a number of times since March 2020, most recently continuing the pause in repayments in November 2022, though noting this was to be the final extension, according to the Department of Education.
Financial well-being among student loan borrowers has improved since the start of COVID-19, according to a report from the Board of Governors of the Federal Reserve System. More than 70% of self-reported adults with outstanding debt said they were doing “at least okay financially” in 2021 compared to 65% two years ago.