Student loan borrowers in the United States are facing the resumption of loan payments as a result of a debt ceiling deal reached in Washington.
The agreement, if signed into law, will reinstate payments on federal student loans that were paused during the pandemic
These payments will resume at the end of August, with bills becoming due the following month. Approximately 43 million borrowers will be affected by this change.
The resumption of student loan payments comes at a challenging time for borrowers like Daniel Galván, a 34-year-old university administrator from Southern California. Galván, who still owes around $10,500 on his student loans, expressed concerns about managing his financial obligations amidst higher food costs and unexpected expenses. The payment pause had provided temporary relief, allowing Galván to save money for a house and cover initial expenses. However, with the arrival of twin babies, he is now facing increased financial pressures.
The student loan payment pause was initially implemented in March 2020 under the CARES Act, signed by then-President Donald Trump. President Joe Biden extended the pause, citing concerns over inflation and rising gas prices. While the moratorium on payments provided relief for borrowers, it did not apply to those with privately held loans.
Critics, such as Natalia Abrams, the founder of the Student Debt Crisis Center, voiced their disappointment with the Biden administration for allowing the clawback of student loan relief while the larger plan to forgive billions of dollars in student loan debt remains uncertain in the Supreme Court.
There are concerns that borrowers, especially recent graduates who have not factored in loan payments, may be burdened with unexpected bills they cannot afford
Republicans have opposed the continuation of the student loan pause, arguing that it has cost taxpayers billions of dollars each month. The resumption of payments could disrupt the lives of 40 million borrowers, according to Cody Hounanian, the executive director of the Student Debt Crisis Center. Hounanian expressed concerns about the ability of the Education Department and loan servicers to effectively inform and support borrowers during this transition.
Education Secretary Miguel Cardona, however, assured borrowers that the department is prepared to handle the aftermath of the resumption of payments. Cardona stated that the debt ceiling deal protects the government’s ability to pause student loan payments during future emergencies.
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