If the debt ceiling deal hammered out between President Joe Biden and House Speaker Kevin McCarthy, R-California, passes Congress and is signed into law by the president, the pause on federally funded student loan payments will end, according to McCarthy.
According to the agreement, federally funded student loan payments will restart, along with the accrual of interest, in August.
“The pause is gone within 60 days of this being signed,” McCarthy said this weekend. “So that is another victory because that brings in $5 billion each month to the American public.”
The resumption of student loan payments is included in the agreement reached over the weekend that would suspend the debt ceiling until January 2025.
Student loan payments and interest have been on hold since the COVID-19 pandemic was declared in 2020.
The White House pointed out that the plan Biden announced at the end of last summer is still intact. What the debt ceiling agreement affects is the pause on student loan payments, not the plan to erase some federally funded loans.
“President Biden protected the student debt relief plan in its entirety. House Republicans weren’t able to take away a single penny of relief for the 40 million eligible borrowers, most of whom make less than $75,000 a year,” a White House official told Newsweek on Monday.
Biden announced the student loan forgiveness program in August saying it would allow up to 40 million borrowers to receive $10,000 of student loan forgiveness for those making less than $125,000 a year, or households making less than $250,000.
Pell Grant recipients will be eligible for an additional $10,000 in debt forgiveness.
According to the DOE, 26 million people submitted applications for relief of federally backed student loans this past fall, with 16 million approved.
Several lawsuits were filed over the president’s plan to forgive the debt leading up to the U.S. Supreme Court agreeing to hear two of those cases. The court heard the cases in February. It has not yet issued an opinion, though it is expected by the end of June when the court recesses.
In November, Biden announced that he would be extending the pause on paying back federally funded student loan debts until 60 days after the Biden administration is allowed to implement the plan after the litigation is resolved, according to a news release by the U.S. Department of Education.
Biden had said that if the plan can’t proceed and if legal challenges are still unfolding by June 30, student loan payments will restart 60 days after that.