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The debt ceiling deal finalized between President Joe Biden and House Speaker Kevin McCarthy on Sunday would reinstate student loan payments and the accrual of interest in late August.
“The pause is gone within 60 days of this being signed,” McCarthy said on Fox News, though the legislation, as with existing plans to sunset the pause, actually stipulates a timeline of 60 days after June 30. “So that is another victory because that brings in $5 billion each month to the American public.”
The Biden-McCarthy deal would suspend the debt limit until January 2025. The plan now heads to Congress for a vote.
‘TWO VERY DIFFERENT PLACES’:As Supreme Court gears up to rule on student loan cases, Americans are split on debt forgiveness
Are student loans still deferred?
Yes. Student payments and interest have been on pause since the onset of the pandemic, a moratorium first adopted and extended under former President Donald Trump and then extended again under Biden.
But that won’t be the case for long. The Biden administration, whose mass student debt forgiveness plan is currently held up in the Supreme Court, has faced mounting pressure to lift the moratorium.
Even before Sunday’s deal, efforts were underway to bring student loan payments back.
A bill that passed out of the House last Wednesday would end the payments as well as Biden’s broader plan to relieve up to $20,000 in student loan debt for Americans with individual incomes of less than $125,000.
Before that, in March, the student loan refinancing company SoFi sued the federal government over the pause, seeking to end it.
BIDEN’S STUDENT LOAN FORGIVENESS PLAN:Lawsuit filed to end student loan payment pause
Education Department prepares for return to student loan payments
Education Secretary Miguel Cardona has stressed the moratorium has an expiration date.
In a Senate Appropriations Committee hearing in May, the secretary said borrowers should prepare to start making payments again no later than 60 days after June 30 or after the Supreme Court issues its decision on the two cases challenging Biden’s broad relief plan.
“The emergency period is over, and we’re preparing our borrowers to restart,” Cardona said in the hearing.
But as reported by Politico, internal Education Department documents indicate it could be until October at the earliest that the process resumes. According to the documents, department officials anticipate needing several months to transition back into payments.
In a statement, a White House official said Biden “protected the student debt relief plan in its entirety,” including that for mass forgiveness and for improvements to income-driven repayment options. “The administration announced back in November that the current student loan payment pause would end this summer — this agreement makes no changes to that plan,” the official said, noting Biden retained his administration’s “authority to pause student loan payments, as appropriate, in the event of future emergencies.”
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