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Disbursement break for student loans ends this year, confirms education secretary


Washington (CNN) The pause on federal student loan payments is still set to end later this year, Education Secretary Miguel Cardona confirmed this week.

The pandemic-related hiatus has been in place for more than three years and has been extended eight times — even sometimes after the Biden administration declared the latest extension final.

But Cardona reiterated Tuesday that the current timeline remains in place. It ties the restart date to litigation over the administration’s separate, one-time student loan forgiveness program, which has been taken up by the Supreme Court.

Payments are set to resume 60 days after the Supreme Court issues its decision, or 60 days after June 30 – whichever comes first. The judges are expected to rule in late June or early July, but a decision could come earlier.

“We announced that after the Supreme Court decision is made, loan repayment will begin within 60 days of the decision,” Cardona said when pressed during a hearing held by the House Committee on Education and the Workforce on Tuesday.

If the Biden administration is allowed to move forward with the loan forgiveness program, low- and middle-income borrowers could be eligible for up to $20,000 in debt relief before payments start again.

Last week, Cardona also confirmed the restart date at a Senate Appropriations subcommittee hearing.

“We are committed to ensuring that once a decision is made, we will resume payments 60 days after. But no later than June 30, we will begin that process,” he said.

Restarting payments will be an unprecedented task

When the break ends, about 44 million people will have to restart making payments on their federal student loans, and there is some concern about whether the process will go smoothly.

Many people can be confused about how much they owe, when they have to pay and how. Millions of borrowers want a different servicer handling their student loans since the last time they made a payment. Missing payments may result in monetary charges.

Congress appropriated the Federal Student Aid office about $800 million less than the Biden administration had requested this year, keeping the office’s operating budget the same as last year, although there will be more work to do. Some student loan servicers have recently cut back on customer service hours, raising fears of uneven repayment.

“We recognize that our borrowers need information. And they need a long run-in because it’s been three years,” Cardona said last week.

“We plan to ensure it is a smooth re-entry into repayment and we stand ready at the FSA to provide the support that students need,” he added.

Student loan experts recommend that borrowers contact their student loan servicer with questions about their loans as soon as possible, especially if they are interested in signing up for an income-driven repayment plan. These plans, which set payments based on income and family size, can lower monthly payments but require borrowers to submit some paperwork.

Federal student loan borrowers can check the FSA website for updates on resuming payments.

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