Student-loan payments will resume… for up to 45M borrowers if the bipartisan debt-ceiling deal is passed into law (which President Biden expects to happen). A provision in the deal would end the pandemic pause on payments after eight extensions, three years, and two presidents; prohibit future pause extensions without an OK from Congress; and restart repayments (and interest accrual) at the end of August.
What it means…
For borrowers: Millions will find themselves with a different loan servicer after federal contracts changed during the pandemic. FYI: several servicers have cut customer-service hours, which could cause headaches.
For student-debt cancellation: Biden’s debt cancellation isn’t affected by the proposed deal. That remains in the hands of the Supreme Court, which is expected to issue a ruling in the coming weeks.
For the White House: The deal is in line with the Biden admin’s timeline to end the pause. But it would block the executive branch’s ability to extend the pause if SCOTUS strikes down the debt-cancellation plan.
By the numbers:
$37K: the average paused student-loan balance
$200-$300: the typical monthly loan payment prepandemic
38%: share of borrowers with at least one loan in deferment prepandemic
$5B: the monthly cost of the pause to the US gov’t