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The Biden administration’s student loan forgiveness plan has been rejected by the Supreme Court and will not be enacted. As a result, applications for debt relief are now paused indefinitely. Federal student loan interest will begin accruing again on September 1, 2023 and your first payment will be due starting in October.
You can sign up to get updates on student loan forgiveness and repayment plans on the Department of Education’s website.
President Joe Biden announced up to $20,000 of forgiveness for federal student loan borrowers on August 24, 2022 — however, borrowers have yet to see this order enacted. The plan was quickly contested in the courts and put on hold until a decision could be reached. The Supreme Court is expected to hand down its verdict by the end of June 2023.
In addition, the student loan payment pause is scheduled to end on September 1, 2023, after numerous extensions.
Here’s what you need to know about student loan forgiveness and the extension of the pause on student loan payments:
- What this means for federal student loan borrowers
- When will student loan payments resume?
- What to do if you can’t make your student loan payments
What this means for federal student loan borrowers
Many borrowers could benefit from President Biden’s announcement, but not all. If your annual income is more than $125,000 for single people or $250,000 for married couples who file a joint tax return, you won’t qualify for the forgiveness.
But if your income is below the threshold, you could see your federal student loan balances reduced by as much as $20,000. If you took out federal student loans and also received Pell Grants, you’re eligible to have $20,000 of your federal debt forgiven. If you have federal student loans but didn’t receive Pell Grants, your forgiveness amount is $10,000.
The exact amount of your forgiveness is capped at your debt. For example, if you received a Pell Grant while in college and have $25,000 in federal student loan debt, you can get $20,000 of it waived. But you’ll still be responsible for paying off the remaining $5,000 balance.
The CARES Act first introduced the payment pause in March 2020. Borrowers weren’t required to make payments on their federal student loans, and their loans didn’t accrue interest. The payment pause has been extended several times, but is now scheduled to end on September 1, 2023. Nearly 37 million borrowers have had about $195 billion in loan payments waived between March 2020, when the deferral began, and April 2022, when the deferral was last extended, according to the Federal Reserve. Learn More: What to Know About the CARES Act and Student Loans If you have a federal student loan balance, you’ll have to begin making payments again after September 1, 2023. At least 21 days before your first payment is due, you’ll receive a billing statement or other type of notice that will include your payment amount and due date. You can also contact your loan servicer at any time to get an estimate of your payment and due date. Before payments resume, the U.S. Department of Education recommends you: If you won’t be able to make your federal student loan payments, you have some options that could help: See Your Refinancing Options Keep Reading: The Complete List of Student Loan Forgiveness ProgramsPayment pause extended a final time
When will student loan payments resume?
What to do if you can’t make your student loan payments
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