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Don’t Be Caught Off-Guard When Student Loan Payments Resume Mid-2023

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After more than two years of forbearance, some Americans may have forgotten about their student loan debt.

Since Joe Biden has been in office, no one has had to make a student loan payment on federal student loans (January 2021). (The current forbearance began with the CARES Act on March 27, 2020, before Biden was elected, in the early months of the Covid pandemic.)

That is all about to change, as of August 29, 2023, or perhaps even earlier, depending on when the Supreme Court rules on Joe Biden’s plan to forgive up to $20,000 in student loans made to low-income families.

Biden’s new student loan forgiveness plan is stalled for now — but so are payments — until mid-2023.

The Biden administration took significant steps on canceling federal student debt in the fall, forgiving up to $20,000 in federal student loan debt for a couple (which, for many debtors, will wipe out their balance entirely), but the courts have stalled that process. And the courts may thwart him.

The supreme court has put the Biden administration’s loan forgiveness plan on hold.

The question before the court is whether the president has the constitutional authority to forgive that debt — whether the executive branch can do that without congressional approval.

The Biden administration decided to postpone the end of the forbearance until 60 days after the court decides the status of the loan forgiveness program (maybe August 29, 2023??) because the student loan forgiveness program was timed to coincide with the end of loan forbearance, which began with the current Covid pandemic, So it remains the case that no federal student loan payments have been required since before Biden took office in January of 2021.

Planning for the coming restart of student loan payments

Now is the time to start thinking about your options if student loan payments resume sometime in the middle of 2023.

Starting Points for Student Loan Research: Issues to Start Researching

Check out these articles to learn about getting ready for 2023.

 

Co-signers and parents, are you ready for what’s coming?

Did you know that if you’ve co-signed for your child’s student loan, loan payments can be deducted from your monthly social security check if you don’t pay them?

Preparing for Repayment to Resume (from FederalStudentAid website)

Here are four steps to make sure you’re prepared for student loan payments to resume:

  1. Update your contact information in your profile on your loan servicer’s* website and in your StudentAid.gov profile.

  2. Review your auto-debit enrollment or sign up for the first time. To do so, log in to your loan servicer’s* website or contact your loan servicer directly.

  3. Check out Loan Simulator to find a repayment plan that meets your needs and goals or to decide whether to consolidate.

  4. Consider applying for an income-driven repayment (IDR) plan. An IDR plan can make your payments more affordable, depending on your income and family size.

(*Loan Servicer –  A company that collects payments, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a federal student loan on behalf of a lender. If you’re unsure of who your federal student loan servicer is, you can look it up in “My Federal Student Aid.”)

If you haven’t taken advantage of the various income-based repayment options, now is the time to get familiar with them and figure out which ones may help you manage your student loan debt.

Other Student Loan Relief Programs, Attempted and Otherwise, Go Forward. (Thank You, Joe Biden!)

The treatment of various aspects of student loan debt under the Biden administration is, in many ways, an about-face from the treatment of student loans under the Trump administration — under the leadership of Betsy DeVos.

Under DeVos’s leadership, the Department of Education took a hard-line stance when it came to forgiving loans from failed private universities (Corinthian, ITT, Westwood, and Marinello, for example) that gave students worthless degrees after taking thousands from them in loan agreements, after promising a high likelihood of high-income jobs upon getting a degree from them when, in fact, such prospects were unlikely. The degree from the educational institution carried little or no weight in the job market.

The Biden administration has taken a much more generous approach towards forgiving loans to students of failed universities, where people ended up with worthless degrees.

The Biden administration released a series of rule changes that should make it easier for many student loan debtors to get relief, according to this NCLC article from September of 2022.

They mention the following:

Source: Twelve Dramatic Changes Offering Relief for Student Loan Borrowers. – September 06, 2022

About Albin Renauer

Albin Renauer is the founder of Legal Consumer, which he began in 2006 as an online companion to his book, How to File for Chapter 7 Bankruptcy. Albin received his J.D. from the University of Michigan Law School in 1985. He worked for various public-interest law firms in the Bay Area and also as a staff attorney for Chief Justice Rose Bird of the California Supreme Court. He also spent 17 years as an editor at Nolo, where he helped create numerous books and software programs, including the bestselling WillMaker. He edited Law on the Net, the first online directory of legal resources and was the architect of Nolo's Webby Award winning website during the dot-com boom.