The US Supreme Court is deliberating over two cases challenging President Joe Biden's plan to forgive up to $20,000 in student loan debt per eligible borrower. How the justices rule will affect the 40 million borrowers eligible for relief, including nearly 20 million who could see their entire balance erased.
It could also determine when borrowers have to start repaying federal student loans.
Payments and interest were suspended in March 2020 at the start of the COVID-19 pandemic. Since then, the restart date has been pushed back eight times by two administrations.
After rolling out the debt forgiveness plan in August, the White House said payments would resume on Jan. 1, 2023. But after two legal challenges made their way to the Supreme Court, the pause was extended again.
"It isn't fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuit," Biden said in a statement in November.
Here's what you need to know about federal student loan payments, including which loans are paused, when repayment will restart and what happens to borrowers in default.
For more on student debt, find out if you should keep paying off your loan during the pause and the benefits of refinancing your student loan.
When will student loan payments resume?
When loan payments and interest will restart isn't entirely clear yet.
In November, President Biden said the current forbearance was being extended "to no later" than June 30, 2023, to give the Supreme Court time to rule on two cases examining the Department of Education's authority to discharge billions in student debt.
The court heard opening arguments in both cases on Feb. 28, 2023. It must issue its ruling by June 30, when the justices head into summer recess, though a decision could come earlier.
The White House has repeatedly said it would give borrowers 60 days' notice before restarting payments.
If the court rules before June 30, the forbearance could end 60 days after the decision is announced. So, if the justices release an opinion in March, payments would presumably restart in May.
But student loan expert Mark Kantrowitz said he thinks the administration will wait to start the countdown until the beginning of the month following the Supreme Court's ruling.
So, if a decision came on March 19, according to Kantrowitz, the 60-day period would start on April 1 and loan payments would resume on June 1, 2023.
If the court waits until June 30 to rule, though, the forbearance wouldn't end until Sept. 1, 2023.
It's always possible the moratorium could be extended again, but experts say that would only be a gambit to buy time, not a permanent solution to the student loan crisis.
What is Biden's student debt forgiveness plan?
Americans carry some $1.6 trillion in outstanding education debt. The program would forgive $10,000 in public student loans for individuals earning less than $125,000 per year, or married couples making less than $250,000 combined.
Borrowers paying off federal Pell Grants would be eligible for an additional $10,000 in relief.
Which student loans are paused?
The moratorium on student loan payments and interest includes all federally held student loans, regardless of what company is servicing the loan. Eligible student loans include:
- Direct federal student loans
- Federal Family Education Loan program loans held by the Department of Education, aka FFEL
- Federal Perkins Loans held by the Department of Education
- Defaulted FFEL loans not held by the Department of Education
- Defaulted Health Education Assistance loans, aka HEAL
Student loans that are not eligible include:
- Nondefaulted FFEL loans not held by the Department of Education
- Federal Perkins Loans not held by the Department of Education
- Nondefaulted HEAL loans
- Private student loans
If your student loans are eligible, payments and interest were automatically paused on March 13, 2020. If you're not sure whether your loan payments are paused or not, contact your loan servicer.
What are the legal challenges to the student loan forgiveness plan?
The Justice Department originally argued that the Higher Education Relief Opportunities for Students Act of 2003, known as the HEROES Act, gave the administration license to "alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies."
But in November 2022, Judge Mark Pittman ruled that Biden's plan was an unconstitutional use of legislative powers by the executive branch. The HEROES Act "does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program," Pittman wrote in his decision.
The White House appealed Pittman's ruling, but a federal appeals court issued an injunction against the plan during the appeals process.
In a separate case, Republican attorneys generals in six states -- Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina -- claim Biden's plan threatens tax revenues from companies that invest in and service student loans in their states.
"It will unfairly burden working-class families and those who chose not to take out loans or have paid them off with even more economic woes," Missouri Attorney General Schmitt said in a statement.
While that challenge was initially thrown out on the grounds that the states failed to establish legal standing, the plaintiffs appealed all the way to the Supreme Court.
What happens to borrowers who were in default?
Borrowers in default will automatically be given a "fresh start," according to the Department of Education.
All defaulted accounts will be returned to good standing, and any delinquencies will be "cured," allowing borrowers to repair their credit and access programs like income-driven repayment plans and Public Service Loan Forgiveness, which is designed for borrowers who work for the government or nonprofit organizations.
Since the federal student loan payment pause began in March 2020, collections on defaulted debts have also been put on hold.
In an April 2022 statement, Secretary of Education Miguel Cardona said, "During the pause, we will continue our preparations to give borrowers a fresh start and to ensure that all borrowers have access to repayment plans that meet their financial situations and needs."