The president formalized the expiration of the student loan payment moratorium as part of the debt ceiling increase agreement that Biden signed into law in June. According to a government official, student loan interest will once again begin to accrue on September 1, 2023, and payments will again become due in October. They will provide borrowers advance notice before payments resume.
Student Loan Interest Resume
Former President Donald Trump implemented the student loan payment suspension with waived interest in March 2020 to provide financial help for millions of federal borrowers throughout the pandemic. Later, President Joe Biden repeatedly extended the pause because of the pandemic but his most latest extension until October was the final one.
Although student loan interest will start to accrue on September 1 and payments are due in October, Education Secretary Miguel Cardona earlier stated that “we’ll help borrowers who are struggling to make payments avoid harsh financial consequences, such as delinquencies and wage garnishments.” Borrowers who are able to pay their debts should.
When the pandemic-era insurance expires, borrowers will likely need to make a significant modification. About 40 million Americans are struggling with student loan debt. The average monthly bill comes to about $350.
The Reason the Pause Will End in the Fall
On its web-page for financial aid, the Education Department states that “Congress recently passed a law preventing further extensions of the payment pause.” Republicans wanted significant cuts to federal spending in exchange for voting to raise the borrowing limit. The Biden administration declined to comply to their request to overturn Biden’s executive order forgiving student loans.
The agreement does, however, contain a clause that formally ends the moratorium at the end of August. The Biden administration had begun preparing borrowers for their payments to resume by September even before the deal.