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Student Loan Pause Extended Again. Here's When You'll Have to Start Paying

The White House has delayed reinstating payments and interest while President Biden's debt forgiveness plan faces legal challenges.

Piggy bank with mortarboard standing over pile of money.
With legal challenges ongoing, the White House has extended the student loan payment moratorium again.
Tom Schmucker/Zimmytws via Getty Images

The moratorium on federal student loan payments has been extended again, as President Joe Biden's plan to cancel up to $20,000 per eligible borrower faces multiple legal challenges.

Payments were previously set to resume on Jan. 1, but in a video statement, Biden said the pause was being extended "to no later" than June 30, 2023, in order to give the Supreme Court time to hear the case during this term. 

"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.

The program is aimed at the more than 45 million Americans who carry a total of $1.6 trillion in outstanding student loans. The nonpartisan Congressional Budget Office estimated that it will cost $400 billion over 30 years.

Student loan payments have been on hold since March 2020. They were set to resume in September 2020, but the moratorium was extended three times by former President Donald Trump and four more times by Biden. 

Here's what you need to know about federal student loan payments, including which loans are paused and what happens to borrowers who are in default.

For more on student debt, find out if you qualify for loan forgiveness, 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?

After multiple extensions since they were first paused in March 2020, student loan payments and interest are now slated to restart 60 days after legal challenges have been resolved, according to the US Education Department.

Should the courts not reach their final rulings by June 30, payments would still resume 60 days later -- on Aug. 29, 2023.

It's always possible the moratorium will be extended again, but experts say that would only be a gambit to buy time, not a permanent solution to the student loan crisis.

The intent is "to make sure borrowers don't have the rug pulled out from under them, rather than an indefinite replacement for loan forgiveness," an unnamed White House aide told The Washington Post

What does Biden's student loan forgiveness plan offer?

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 who have federal Pell Grants would be eligible for an additional $10,000 in relief, for a total of $20,000 in student loan forgiveness. 

Which student loans are currently 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?

This month, a Texas judge ruled that Biden's plan to erase as much as $20,000 in student loans per eligible borrower was an unconstitutional use of "legislative powers" by the executive branch.

The Justice Department had originally argued that the Higher Education Relief Opportunities for Students Act of 2003 (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 on Nov. 10, Judge Mark Pittman ruled that the Heroes Act  "does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program."

The White House appealed Pittman's ruling, but a federal appeals court issued an injunction against the plan during the appeals process.

There are also other legal hurdles: In September, Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina filed suit, claiming Biden's plan threatened tax revenues from companies that invest in and service student loans.

"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 at the time. "The Biden Administration's unlawful edict will only worsen inflation at a time when many Americans are struggling to get by."

District Judge Henry Autrey threw out the lawsuit on the grounds that the six states failed to establish legal standing in the case. But the attorneys general in the Republican-dominant states have already appealed.

Another challenge, by the Wisconsin-based Brown County Taxpayers Association, was rejected by Supreme Court Justice Amy Coney Barrett on Oct. 20. 

What happens to borrowers who were in default?

Borrowers in default will automatically be given a "fresh start," according to the US 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, a student loan relief program 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 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."