Student Loan Payments Resume With Debt Limit Agreement
(Photo by Anna Moneymaker/Getty Images) The Biden administration will reportedly start collecting federal student loan payments and added interest for millions of Americans again by the end of the summer, as a result of the agreement reached by the president and House Speaker Kevin McCarthy to raise the country’s debt ceiling.
In the event that the Biden administration’s debt cancellation program is overturned by the Supreme Court, McCarthy purportedly praised the legislation that would ensure that students would still be forced to pay back their student loans. On Wednesday, the House is anticipated to vote on the agreement. Prior to the June 5th default deadline established by Treasury Secretary Janet Yellen (D-N.Y.), Senate Majority Leader Chuck Schumer (D-N.Y.) has advised senators to get ready for potential votes the following weekend. Stay informed!
The deal, which was released on Sunday night following weeks of negotiations between the White House and GOP leaders, would end the current moratorium on interest and monthly payments after August 30th. The Supreme Court has not yet decided the viability of last year’s proposal to cancel student debt, which would reportedly allow for a maximum $20,000 loan forgiveness per borrower. The Biden administration’s options for responding to a potential Supreme Court decision that halts its debt cancellation plan in the upcoming weeks are limited if the plan to restart payments is made into law. Activists and young adults who are hoping to have their student loan debt reduced have argued that payments should be suspended, at the very least, until the Biden administration is able to fulfill its commitment to cancel student loans like they had promised last year. Over the past two years, the Biden administration has repeatedly declared the end of the payment suspension only to backtrack and announce yet another extension of the policy. However, under the debt ceiling agreement, that course would be off the table. The measure would make it unlawful for the Secretary of Education to use “any authority to implement an extension” of the current moratorium on interest and principal payments on federal student loans. It shields the administration’s plans to grant borrowers a grace period or further payment flexibility as it restarts repayment by failing to present how or when precisely the Education Department must resume collecting payments. White House officials reportedly believe that the agreement formalizes the administration’s intention to resume payments in September. “President Biden protected the student debt relief plan in its entirety,” said White House spokesperson Abdullah Hasan in a statement. “The Administration announced back in November that the current student loan payment pause would end this summer — this agreement makes no changes to that plan.” Payments would begin 60 days after a court ruling or on June 30th, whichever occurred first, according to the Education Department. Education Department officials have been planning for the resumed payments this fall, and Education Secretary Miguel Cardona recently stated publicly that he was committed to that timeframe. “Despite Republicans’ efforts to end targeted student debt relief and move up our planned end to the payment pause, we will ensure a smooth return to repayment process,” Cardona said on Twitter on Sunday. Despite Republicans’ efforts to end targeted student debt relief and move up our planned end to the payment pause, we will ensure a smooth return to repayment process. The deal also protects our ability to pause student loan payments should that be necessary in future emergencies — Secretary Miguel Cardona
Cardona continued, adding that the “deal also protects our ability to pause student loan payments should that be necessary in future emergencies.” The House GOP debt ceiling package included several provisions that would have permanently limited the Education Department’s ability to modify or cancel student loans. As Republican leaders pitched the idea to many members of their caucus who wanted it to go farther in halting Biden’s student loan policy, Kevin McCarthy (R-Calif.) hailed the removal of the student loan suspension as a “victory” on Sunday. McCarthy also stated in an interview on Fox News that the government loses out on about $5 billion in monthly revenue as a result of the suspension.
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