When Are Student Loans Due Again? What You Should Know

During the COVID-19 pandemic and the national emergency that ensued, the US Department of Education put a pause on student loan payments for outstanding federal student loans. This student loan payment pause has been welcomed by many borrowers throughout this period of economic uncertainty, though it won’t last forever. 

The most recent extension of the pause on federal student loan repayment marks the ninth time they’ve extended this interest-free forbearance, as it was previously set to end in December 2022. 

Let’s take a look at what borrowers can expect once payments resume, and when this payment pause will end. 

When Are Student Loans Due Again? 

Your first question is probably – when do federal student loan payments resume? What will happen when this forbearance ends?

As of now, student loans borrowers will likely not need to make their payments again until the end of summer 2023. However, the exact date is still unknown at this time, with many pushing for student loan forgiveness as the payment pause continues. 

The forbearance of student loan payments has already been pushed back a number of times since the beginning of the pandemic. However, the Supreme Court is currently ruling on the legitimacy of President Biden’s plan to cancel a certain amount of student debt per borrower.

In this case, the forbearance of student loan payments could end sooner depending on the decision of the Supreme Court based on the debated legal challenges of the plan that have been brought forth. 

As it stands, the repayment of federal student loans will begin 60 days after the Supreme Court rules on the debt cancellation and forgiveness plan proposed by President Biden, or 60 days after June 30 of this year, whichever date arrives sooner. 

Of course, President Biden could extend the forbearance again, which would push the payment pause back even further. 

What Will Student Loan Due Look Like? 

Once payments on federal student loans resume, what will the payment look like? Typically, student loan repayment includes a portion of interest and the principal amount, so how did that change while payments were not being made?

During forbearance that President Trump ordered in March of 2020, student loan debt stopped accruing interest, and borrowers were allowed to skip payments.  

So, even though there’s been a payment pause and a few years have passed since a federal student loan payment was due, the balance of the debt should not have increased during this time. Essentially, the interest rate on federal student loan debt was 0% since March 2020.

What this means is that once the Supreme Court or U.S. Education Department makes their decision, you will be left with the same balance of student debt as you had before the federal government enacted this payment pause initially if you were under a standard repayment plan. 

Plus, if any level of student loan forgiveness is able to make it past the Supreme Court, your balance will be credited with the difference. The ruling that is currently undergoing litigation is President Biden’s proposal for student loan forgiveness in the amount of $20,000 per borrower.

For the borrowers that are income-driven repayment plans, the remaining balance of their student debt is canceled after they make a certain number of payments. Luckily for these borrowers, each month that passes during the payment pause is included in their total number, meaning they’ll have to make fewer payments once payments restart.   

What Happens To Student Loans In Default? 

Another aspect of the student loan forbearance that was put in place in March 2020 is that collections activities against defaulted student loans were paused by the U.S. Education Department as well. 

So student loan interest was paused, though collections on defaulted loans was too. 

How To Prepare To Start Paying Student Loans Again? 

If you haven’t made student loan payments in the past few years, you may need to get financially prepared for these payments to resume since you may have been enjoying some extra discretionary income at this time. 

Again, it’s not that the balance of your loans has increased over this time, though if you’ve been out of routine from making these payments, you may need to carve out a portion of your monthly budget to start repaying your federal student aid again.

For this reason, many people have continued to make their payments over the forbearance period if they were financially able, because their balance did not accrue interest, and they did not want to have a payment holiday where they got used to not having payments. 

But, if you haven’t made any payments to your loan servicer over the past three years, you may want to start making full or partial payments before you’re obligated to in order to get back in the practice of doing it.  You may want to contact your loan servicers beforehand to see what your payment amount will be once the repayment pause ends finally. 

Again, the loan servicer and/or the U.S. Department of Education will notify borrowers within 60 days of the monthly payment resuming. So, this should give you some time to prepare for the payments even if you haven’t done so throughout the past few years.

However, if Biden’s proposed student loan forgiveness plan goes into place, you won’t have to make repayment of your loan balance. Though if it doesn’t go through, or you’ll still have a balance remaining after the permitted student loan relief passes, you’ll have to pay back the balance eventually as payments will resume at some point. 

Conclusion

At this point, federal student loan borrowers should be aware that there is not a set day for when payments will resume. However, decisions will likely be made in the coming months unless the white house extends forbearance further. 

Ahead of your monthly payment resuming, you may want to make a plan for how you’ll incorporate this payment into your budget if you have gotten out of the habit of making it since the payment pause began in March 2020. 

There is no guarantee that the debt cancellation plan of the Biden Administration will go through, so it’s important to make a plan regardless of the decision the Supreme Court makes in the coming months. Plus, the white house has not made strong indications that forbearance will be extended further at this time. 

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