Now that the Supreme Court has ruled to strike down President Biden’s student loan forgiveness plan, the moratorium on payments is coming to an end.
The student loan payment moratorium went into effect in March 2020, due to the pandemic. Federal student loan payments were suspended, and interest rates were set to zero. Now, more than three years later, student loan payments are resuming.
When exactly do student loan payments resume?
Interest rates will revert back to the levels they were at before the moratorium on Sep. 1, 2023. But the actual first payment will not be due until October.
Borrowers will receive an advance warning email at least 21 days before their payment is due. That email will specify the payment due date and amount.
So if you had outstanding student loans, make sure you’re keeping an eye out for updates about your payment.
What does this decision mean for borrowers?
While the Biden administration is looking for other pathways to loan forgiveness, borrowers should prepare to resume their payments.
This is the perfect time to make sure you still know where to pay your loans, and update any information that might have changed. Find out what your login is, and make sure you know how to receive important updates and communications from the servicer.
You can also check your student loan information at StudentAid.Gov to review your information and prepare for student loan payments to return.
Review my post about broad student loan forgiveness to see the different repayment options available for student loan borrowers.
Student loan payments resuming: The economic impact
As borrowers prepare to resume student loan payments again, the economy could take a hit.
Many people haven’t made a student loan payment since 2020, and after three years without those payments, their budgets may have adjusted.
Meanwhile, inflation has made everything more expensive, and credit card debt is near a record-breaking $1 trillion – a 20 percent increase from last year.
Missing credit card payments is more expensive, too, as the rates are about five percentage points higher than they were last year.
When student loan repayments resume, we might have a lot of people in the U.S. who aren’t prepared to start making those payments, and are already maxed out on the expenses of daily living. So we will have to watch and see how the economy responds once student loan payments are due again.
Do you need help planning for your financial future? Contact me today to set up a meeting to talk about your goals.