Student Loan Payment Pause Extended Once Again Due to Lawsuits Delaying Cancellation

On August 24, 2022, President Biden announced that to provide Americans still recovering financially from the pandemic with breathing room when student loan payments resumed at the beginning of 2023, the federal government would cancel up to $20,000 in federal student loans for eligible borrowers beginning this fall. However, because of recent lawsuits attempting to block President Biden’s cancellation plan, cancellation is now on hold while the cases are being litigated. The Supreme Court will hear arguments on the cancellation plan in February, and should issue a decision by the end of June. 

Because courts have prevented the Biden Administration from canceling any debt while the litigation is ongoing, the White House has extended the student loan payment pause that was set to expire at the end of December 2022. The payment pause has now been extended until 60 days after the litigation is resolved. If the litigation is not resolved by June 30, 2023, the Department of Education has said that repayment will begin again by 60 days later – i.e., on or around September 1, 2023. 

This extension is necessary to ensure that low- and middle-income borrowers, who were promised an opportunity to have their debt canceled before repayment resumed, are not harmed by being forced to resume making payments before they can get debt relief. This is particularly important in light of projections that borrowers would face unprecedented levels of financial distress and loan default if required to make loan payments without first receiving debt relief.

The extension of the payment pause is also good news for borrowers who have been in limbo and worried whether they would have to make payments soon on debt they have been told would be canceled. Until the cases are resolved, or June 30, 2023 (whichever comes first), borrowers will not have to worry about resuming payments on their student loans. The interest rate freeze will remain in place as well, so borrowers will not have to worry about their loan balances increasing while they await a decision. 

For more information about the payment pause extension, see the Department of Education announcement here, and our prior blog post about what the pause means for borrowers here.  

Where can I find more updates about cancellation? 

If you are one of the 26 million people who have already applied or have already been told by the Department of Education that you are eligible for relief, you likely have questions about what the recent court cases challenging cancellation mean for your student loans. For more information about the lawsuit, see our recent blog post here. You can find more updates about the original plan for the student debt relief program here. For updates on the status of the cancellation plan, sign up for email updates from the Department of Education here

For more information about other types of student debt relief, visit our page here

Share your story!

What would your life look like if you had to make student loan payments without getting the debt relief promised? How would student debt relief benefit you and your family?

Please share your story with us here so we can continue to uplift the voices of borrowers and explain how these decisions impact real people. 



Published at Thu, 01 Dec 2022 17:47:56 -0600

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Photo by: Iris Lei
By USF SLE on 2022-11-11 07:39:29

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