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Get ready: Student loan interest, payments set to resume

Payments won't come out automatically, and there are options to help lower monthly payments when they resume later this year.
Get ready: Student loan interest, payments set to resume
Posted at 11:30 AM, Jun 15, 2023

As student loan borrowers await the fate of a Supreme Court case on student loan forgiveness, a pause on payments ends Oct. 1. 

According to the Department of Education, interest on federal student loans will begin accumulating in September. Payments will be due starting a month after. 

This will officially bring an end to an over three-year moratorium on student loan debt payments originally implemented by the Trump administration at the onset of the pandemic. Payments were set to resume earlier this year, but paused due to the uncertainty surrounding the case now in the Supreme Court. 

The court is expected to rule soon on whether federal student loan borrowers can have up to $20,000 of their debt forgiven by the government. 

President Joe Biden's plan calls for borrowers with incomes of up to $125,000 to receive up to $10,000 in federal student loan forgiveness. That amount increases to $20,000 for borrowers who received Pell Grants.

SEE MORE: Significant Supreme Court rulings expected in coming days, weeks

If the Supreme Court were to allow President Biden's plan to be enacted, those who have their loans fully forgiven would not be required to pay anything. 

The Department of Education said that payments won't automatically be taken from accounts and servicers would contact borrowers to resume payments. 

The Department of Education is also encouraging borrowers who might struggle with payments to explore its income-driven repayment plans. 

When payments do resume, the Brookings Institution said millions will likely be unprepared to make payments. 

"Regardless of one’s view on the merits of Biden's loan cancellation plan, it is dangerous to ignore the substantial likelihood that judicial rulings will end the payment pause, strike down cancellation, or both. Failing to prepare at-risk borrowers for these outcomes is irresponsible and may inflict more harm on those who have already spent years struggling with burdensome student debt," the report said. 


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