The Biden Administration has pushed student loan forbearances into 2023 for all federal student loans. As a result, both payments and interest are both currently halted. The forbearance is a byproduct of the Administration's efforts to forgive up to $20,000 in student debt per borrower.
The Supreme Court is hearing arguments challenging the Administration's $20,000 forgiveness program. Until there is a final decision, the forbearance may be extended. If a decision is reached, payments will resume 60 days after the decision. If no decision is reached, payments will resume 60 days after June 30, 2023. So, as of now, the expected date that payments start up again is unknown.
Once payments restart, interest will also begin accruing. Payments should also remain at their pre-forbearance minimums since loans haven't increased.
As mentioned above, the forbearances pertain only to federal student loans. Those with private loans are not part of the forbearance or potential student loan forgiveness. Many may not realize this as their student loans could have started as federal loans but eventually transitioned to a private lender, disqualifying them from federal student loan benefits.
The original forbearance started with the Trump Administration in March 2020. Not only did payments stop then, but the interest went to 0%, and any collection activities on defaulted loans also stopped.
For those on regular payment programs, their loan balances will be the same as in March 2020, assuming no payments were applied to the loan. Those with income-driven repayment plans will have time subtracted from their total loan life. For example, $12,000 or less loans are forgiven after 10 years. Those with such loans already have three years applied without making any payments.
The most recent forbearance extension, announced in November 2022, marks the ninth extension to the forbearance program. The previous extension was set to expire on December 31, 2022.
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