Debt ceiling deal finalized between President Joe Biden and House Speaker Kevin McCarthy on Sunday would restore student loan repayments and interest accumulation at the end of August.
“The break is over within 60 days of signing,” McCarthy told Fox News anchor Shannon Bream. “So that’s another win because it brings in $5 billion every month to the American public.”
The Biden-McCarthy deal would suspend the debt limit until January 2025. The plan is now heading to Congress for a vote.
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Are student loans always deferred?
Yes. Student payments and interest have been on pause since the start of the pandemic, a moratorium first adopted and extended under former President Donald Trump and then extended again under Biden.
But that won’t be the case for long. The Biden administration, whose massive student debt forgiveness plan is currently upheld by the Supreme Court, has faced mounting pressure to lift the moratorium.
Even before Sunday’s deal, efforts were underway to bring back student loan repayments.
A bill that passed the House last Wednesday would end the payments as well as Biden’s broader plan to provide up to $20,000 in student loan debt relief for Americans with individual incomes below $125,000.
Before that, in March, student loan refinance company SoFi sued the federal government over the break, seeking to end it.
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Education Department prepares for return of student loan repayments
Education Secretary Miguel Cardona pointed out that the moratorium had an expiration date.
During a Senate Appropriations Committee hearing in May, the secretary said borrowers should prepare to start making payments again no later than 60 days after June 30 or after the Supreme Court issues its decision on the two cases challenging Biden’s sweeping relief plan.
“The emergency period is over and we are preparing our borrowers to restart,” Cardona said during the hearing.
But as Politico reports, internal Department for Education documents indicate that it could be until October at the earliest that the process resumes. According to the documents, ministry officials expect it will take several months to return to payments.
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This article originally appeared on USA TODAY: Debt ceiling deal would restore student loan repayments: What it means