Are federal student loan payments about to resume? What NC borrowers need to know

Mary Ramsey
·2 min read
7

A pandemic-era reprieve for many North Carolinians with student loan debt is likely coming to an end later this summer.

The pause on federal student loan payments -- begun by the Trump administration in the early days of the COVID-19 pandemic and extended multiple times since -- is expected to end in August as part of a bipartisan deal to raise the debt ceiling.

That deal passed the U.S. House of Representatives late Wednesday and is now in the hands of the U.S. Senate.

The news comes as borrowers await a Supreme Court decision on potential loan forgiveness.

Here’s what to know about federal student loan repayment and the status of the court battle over the Biden administration’s student loan forgiveness plan.

Are student loan repayments going to resume?

The debt ceiling deal currency in Congress includes provisions to let the student loan forbearance that started during the pandemic expire and to require congressional approval for the pause to be extended again, NPR reported.

If the deal becomes law, payments would resume 60 days after June 30, meaning late August. Federal student loans that were part of the forbearance would also start accruing interest again.

The deal passed the House on Wednesday night, and the U.S. Senate may vote on the package as soon as Thursday night, CNN reported.

Federal Education Secretary Miguel Cardona had said previously the loan pause would end this year.

More than 43 million borrowers across the country will be impacted, per NPR.

In Charlotte, the average student loan debt is $26,453, The Charlotte Observer reported previously.

What’s the status of the Biden student loan forgiveness plan?

In addition to the pause on payments, the Biden administration proposed last year forgiving up to $10,000 of federal student loan debt per borrower earning less than $125,000 or up to $20,000 of debt for borrowers who received a Pell Grant.

But a court case seeking to block that plan has made it all the way to the U.S. Supreme Court, which heard arguments in the case in February.

A ruling from the Supreme Court is expected in June or early July, per NPR.

The federal Department of Education has stopped accepting loan forgiveness applications amid the ongoing court battle but will reopen the application at studentaid.gov/debt-relief/application if the court rules in the Biden administration’s favor.