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The Latest Updates on Federal Student Loans

Federal student loan forgiveness – will they or won’t they? And when might repayment actually begin? If you hold federal student loans, you were likely eagerly awaiting the news that came on August 24, 2022, when the Biden/Harris administration announced up to $20,000 in federal student loan debt relief. However, since then, courts have blocked these efforts and applications for the program have been paused. Additionally, the pause on federal student loan payments, interest, and collections has also been extended again. Here’s what you need to know:

Courts Blocking Student Debt Relief Program

Several lawsuits have been filed citing harm to certain groups excluded from the debt relief; entities that may lose revenue from the debt cancellation; and/or declaring President Biden does not have the authority to cancel such a large amount of debt without the approval of Congress. The Biden administration has asked the Supreme Court to overturn these orders, but the program cannot move forward until the litigation is settled.

The Department of Education is currently not taking any new applications for the debt relief program. If you have already filed an application for forgiveness, the Department of Education says it will keep the information on file.

Extended Pause on Federal Student Loan Repayment, Interest, and Collections

On November 22, 2022, The U.S. Department of Education announced:

“The student loan payment pause is extended until the U.S. Department of Education is permitted to implement the debt relief program or the litigation is resolved. Payments will restart 60 days later. If the debt relief program has not been implemented and the litigation has not been resolved by June 30, 2023 — payments will resume 60 days after that. We will notify borrowers before payments restart.”

So what does that mean? If the Supreme Court makes a ruling before June 30, 2023, payments will resume 60 days after the ruling. If a ruling hasn’t been made by June 30, repayment will begin 60 days after that date. Once the payment pause ends, you’ll receive your billing statement or other notice at least 21 days before your payment is due. This notice will include your payment amount and due date.

Steps to Take During the Pause

  • Take stock of your student loans. As interest rates continue to rise, would it make sense to consider refinancing your private student loans, or federal loans that would not be included in the debt forgiveness program? (Note: Carefully consider your options before refinancing federal student loans, as they will no longer qualify for current and future federal benefits once refinanced with a private lender.)
  • Sign up for updates on the program, and be sure your contact information is up to date with your loan servicer and in your StudentAid.gov profile.
  • Make a plan for repayment. The Department of Education has said it will provide notice when federal student loan payments and interest are set to resume; decide now how to shift your budget to accommodate any student loan payments. If making the payments will be difficult or your financial circumstances have changed, look into options such as an income-driven repayment plan.
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*APR = Annual Percentage Rate

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Using the free student loan refinance calculator does not constitute an offer to receive a loan and will not solicit a loan offer. Any payments and savings will depend on the actual amounts for which you are approved, should you choose to apply. This calculator is provided for educational purposes only and should not be relied upon as financial advice. Always consult your credit union or financial advisor when making your decision.

IMPORTANT NOTICE for refinance borrowers: By refinancing federal student loans, you may lose certain borrower benefits from your original loans. These may include interest rate discounts, principal rebates, or some cancellation benefits that can significantly reduce the cost of repaying your loans. Please review this important disclosure for more information.

Your actual rate within the range stated will be disclosed upon approval. Student borrowers may apply with a creditworthy cosigner which may result in a better chance of approval and/or interest rate.