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Student loan repayments will unfreeze for 40 million borrowers

The 40 million borrowers of student loans will have to start repaying their bills soon

The US federal government is on the verge of default, but House Speaker Kevin McCarthy and President Joe Biden have reached a deal to raise the debt ceiling to prevent debt payment default.

With this debt ceiling deal, borrowers of student loans will need to begin their loan repayments. Below is everything borrowers should know.

Student loan borrowers may start repaying by the end of August

The debt ceiling deal will end the student loan holiday for millions of borrowers. This new legislation is aimed at cutting spending, and it contains a provision requiring borrowers to start repaying student loans after a freeze imposed during Covid-19.

The yearlong pause first started during the Trump administration to give some relief to borrowers during the pandemic as many people had lost jobs and struggled financially.

President Biden warned that the freeze would eventually end around the same time. However, if passed, the new deal would keep him from issuing another extension since he has done that several times before.

With this loan repayment pausing end, millions of borrowers who have taken loans will have to start repaying. Over 45 million Americans owe $1.6 trillion in federal loans.

A person writing in a notebook

Can repayments pause again?

The president has attempted several times to end repayment pauses in the past, but his administration ended up extending the policy each time.

However, the White House won’t have the jurisdiction to extend the pause under the new debt ceiling deal. According to the legislative text, only Congress can suspend student loan collection.

The new deal still requires congressional approval, but once it receives a nod from Congress, the loan payment pause would lift 60 days after 30th June. This means borrowers must repay the debt by the end of August.

The situation is complicated due to Biden’s plan to suspend student loan debt. The president and his administration cannot “forgive” or “extend” loan payments unless Congress authorizes them, which is quite unlikely.

Will the Supreme Court approve Biden’s plan to forgive a multibillion-dollar loan or not is unclear. Conservative majority have shared their skepticism about the plan. 6-3 majority believes that the president cannot bypass Congress to make such a move.

Whether the student loan will be canceled or not is yet to be decided. Stay tuned to Calle Ocho News to get more updates on the debt ceiling deal and student loan repayment. Alternatively, advertise your business with us.

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