There has been a lot of discussions ever since the pandemic struck about student loans in the U.S., from the suspension of payments to outright loan forgiveness.
While the Biden Administration has been pushing hard to forgive many student loans, it has met some opposition, so temporary fixes have been put in place and extended time and time again. In February, progress in Biden’s plan to forgive federal student loans came to a pause as the Supreme Court continues to deliberate on the two legal challenges seeking to quash the program. The Biden administration appealed those rulings to the Supreme Court and the court is expected to have a decision by June. Although things might change, there are currently some important deadlines and dates in place regarding student loan forgiveness in 2023.
Borrowers should take heed and be on the outlook for any developing news.
March 20, 2023
Forgiveness for IDR and PSLF Loans was quietly postponed a year because of insufficient funding.
June 30, 2023
On Nov. 22, Biden stated he would extend the COVID-19 pandemic-era pause on student loan payments no later than June 30 to give the Supreme Court time to review his administration’s requests.
Aug. 30, 2023
The pause on loan repayments will expire at the end of June and resume for most borrowers on Aug. 30.
Per the Department of Education’s student aid website: “The student loan payment pause is extended until the U.S. Department of Education is permitted to implement the debt relief program or the litigation is resolved. Payments will restart 60 days later. If the debt relief program has not been implemented and the litigation has not been resolved by June 30, 2023 — payments will resume 60 days after that. We will notify borrowers before payments restart.”
Each month that payments are paused counts toward forgiveness for people who have Income-Driven Repayment plans, according to studentaid.gov. The rule also applies to people repaying loans under Public Service Loan Forgiveness plans.
End of 2023
Borrowers with certain student loans may have to consolidate their loans directly by the end of 2023, in order to benefit from any relief. Specifically, borrowers with Perkins, FFELP, Health Education Assistance Loan (HEAL) program loans or other non-direct federal student loans have until the end of the year to get the full benefits of any student loan account adjustments. Essentially, this means that anyone with a commercial or non-government loan must be converted into a U.S. Department of Education Loan to qualify. “Borrowers who have commercially managed FFEL, Perkins, or Health Education Assistance Loan (HEAL) Program loans should apply for a Direct Consolidation Loan by the end of 2023 to get the full benefits of the one-time account adjustment,” according to the Department of Education’s current guidance.
Something important to note is that as FFELP loans are excluded from the one-time student loan cancellation program of up to $20,000, consolidating an FFELP loan into an eligible direct loan may negate forgiveness of that new combined loan.
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