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Federal Student Loan Updates – Repayment and Next Steps


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If you have federal student loans, you’ve likely been closely following the news surrounding them for the past few years. Payments and interest on most federal student loans were paused since March 2020 at the start of the COVID-19 pandemic. Additionally, the Biden-Harris administration proposed a one-time student loan debt cancellation plan in 2022, but recently that proposal was struck down. Following the passage of a debt ceiling bill in Congress last month, no further extensions of the interest and payment pause were allowed. 

So what happens now? Here’s a timeline of what we know so far: 

June 30, 2023

On June 30, after nearly a year of uncertainty, the U.S. Supreme Court struck down the proposed student loan debt forgiveness program. Those who had qualified for this one-time debt forgiveness program will not have their loans discharged at this time, but the Department of Education is working on a new plan to help borrowers (see below for more details).

September 1, 2023

Interest on federal student loans will resume. This means interest will begin to accrue on your existing federal student loans at the fixed rate that was in effect when you initially took out the loan(s).

October 2023

Payments on federal student loans will resume starting in October, so start preparing now. Worried about whether you’ll be able to make payments? The Department of Education is planning a 12-month “on-ramp” period in which borrowers’ credit reports will not be negatively impacted if they miss payments. However, interest will still accrue during this time and missed payments will not count toward requirements for income-driven repayment plans or Public Service Loan Forgiveness. If you are able to make payments, you should do so.

New Income-Driven Repayment Plan – SAVE

One way to lessen the stress of federal student loan payments is to enroll in an income-driven repayment plan. Income-driven repayment (IDR) plans calculate monthly student loan payment amounts based on your income and family size. The Department of Education has introduced a new IDR plan called the “Saving on a Valuable Education (SAVE) Plan” that will replace the existing REPAYE Plan. This new plan provides the lowest monthly payments of any IDR plan and may significantly lower or even eliminate required monthly payments for some borrowers. Additional SAVE Plan benefits will go into effect in 2024.

What is “Plan B”?

President Biden has announced the White House will now turn to the Higher Education Act (HEA) of 1965 to have federal student loans erased. This act allows the Education Secretary the ability to “compromise, waive, or release loans under certain circumstances.” Details of this plan are still in the works, but the Department of Education says it will design the parameters of the program with public participation over the coming months. 

What about private student loans?

It is important to remember that any private student loans you hold, such as those through a credit union, are not impacted by any of these measures. 

To stay up to date on the latest developments surrounding federal student loans, visit studentaid.gov.