Student loans have long been a topic of concern for millions of individuals seeking higher education. However, since the onset of the COVID-19 pandemic, the subsequent forbearance of student loans, and legislative attempts to forgive portions of student loans completely, the topic has received increased attention. Ever-changing deadlines and resumption dates for student loans have also led to confusion for those with loans. At the time of this writing, federal student loan payments are set to resume either 60 days after June 30, 2023, or 60 days after the Supreme Court decides the legality of the Biden-Harris Administration’s student loan forgiveness plan — whichever comes first.
This article summarizes the past 3+ years of student loan forbearance and current plans for the resumption of interest.
1. The COVID-19 Relief Measures
In response to the economic hardships faced by borrowers as a result of the COVID-19 pandemic, the U.S. government introduced relief measures to alleviate the financial burden. These measures temporarily halted interest accrual and suspended mandatory payments on federally-held student loans.
2. The CARES Act and Its Extensions
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in March 2020, was the first major piece of legislation that addressed the impact of the pandemic on student loans. It provided relief by suspending interest accrual and monthly payments on federal student loans until September 30, 2020. This relief was initially intended to last for six months.
However, subsequent legislative actions extended the relief provisions under the CARES Act. First, the relief was extended until December 31, 2020, and later until January 31, 2021.
3. The Impact of the Biden Administration
President Joe Biden took office in January 2021 and expressed his commitment to providing further relief for student loan borrowers. In response, on his first day in office, President Biden signed an executive order extending the pause on federal student loan payments and interest accrual until September 30, 2021. The Biden administration would go on to extend the deadline 8 times in total.
4. Loan Forgiveness
The Biden-Harris Administration announced a federal student loan debt relief program on Aug. 24, 2022 — however, it has since been tied up in litigation. While federal student loan payments were set to resume in December 2022, the pause was extended to provide time for this litigation to be settled. Currently, federal student loan payments are set to resume either 60 days after June 30, 2023, or 60 days after the Supreme Court decides the legality of the Biden-Harris Administration’s student loan forgiveness plan — whichever comes first.
Conclusion
Student loan legislation has witnessed significant developments over the past few years, particularly in response to the COVID-19 pandemic. As discussions surrounding student loan reforms continue, it is essential for borrowers to stay informed about any future legislative changes that may impact their financial obligations.