Your federal student loan payments and interest are set to restart. This is what you should know.
Almost 44 million people hold about $1.6 trillion in federal loans, according to data from the Education Department’s office of Federal Student Aid.
How does the debt ceiling agreement affect your student loans?
The agreement on the debt ceiling by President Joe Biden and House Speaker Kevin McCarthy terminates the pause on payments and interest after Aug. 30.
The deal limits what Biden’s administration can do to respond to the ruling. The bill prohibits the Secretary of Education from using “any authority to implement an extension.”
The House could vote on the deal Wednesday and the Senate could vote by this weekend, ahead of a June 5 default deadline, CBS News reported.
What about student debt forgiveness?
This doesn’t affect the student debt cancellation plan, Politico reported, which is still waiting for a decision from the Supreme Court. That ruling is expected this summer.
The forgiveness plan would provide up to $20,000 in debt relief to Pell Grant recipients and up to $10,000 for those without a Pell Grant. This only applies to federal loans. You’re eligible if you make less than $125,000 as an individual, or less than $250,000 as a household.
Payments were already set to resume 60 days after June 30 even without a resolution in court, though it’s been repeatedly extended.
How to prepare
Here’s what Federal Student Aid says you should do to prepare to resume payments:
- Update your contact information on your loan servicer’s website and your StudentAid.gov profile.
- Review your auto-pay enrollment or sign up by logging into your loan servicer’s website or contacting them.
- Use the department’s Loan Simulator to find a repayment plan.
- Think about applying for an income-driven repayment plan.