While President Biden’s debt forgiveness plan is being challenged in court, the White House has postponed the reinstatement of payments and interest on student loans.
Extended student loan payments
President Joe Biden’s proposal to cancel up to $20,000 per qualified borrower faces numerous legal obstacles, so the moratorium on federal student loan payments has been extended.
Payments were scheduled to start again on Jan. 1, but Biden announced in a video statement that the pause would now last “to no later” than June 30, 2023, to allow the Supreme Court time to hear the case this term, according to CNET.
While the courts are reviewing the lawsuit, millions of borrowers who are eligible for relief should not be asked to resume making payments on their student loans, according to Biden.
When payments are to resume
An article published on Business News shares that it is a bit complicated when the payments would resume.
The Department of Education gave a deadline for the start of student loan bills, just like with the previous extension of the payment moratorium.
This time, it left things a little more vague, stating that it would not be able to start paying off debt until 60 days had passed since the lawsuit over its student loan forgiveness plan was reopened.
Therefore, if the legal challenges are resolved by late November, though this is unlikely, the earliest the bills could become due again in late January.
The payments will start in late August if the Biden administration is still fighting for its policy in the courts by the end of June or if it cannot proceed with forgiving student loans by then.
While the Biden administration considered whether to proceed with refinancing student loans for forgiveness, higher education expert Mark Kantrowitz previously advised that borrowers of federal student loans should avoid refinancing their loans with a private lender despite the possibility of lower interest rates.
According to Kantrowitz, borrowers may want to start looking into alternatives now that they know the extent of the impending debt cancellation, assuming the president’s policy is upheld in court. He said that you’re more likely to get a lower rate with a lender because the Federal Reserve is predicted to keep raising interest rates.
