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USA: the payment of student debt starts again. 1600 billion more to make the Americans pay

Federal student loan payments have been stopped since March 2020. But things will change soon and we will return to normal, that is, to pay them.

The U.S. Department of Education, which oversees a $1.6 trillion portfolio of federal student loan debt owed by an estimated 43 million Americans, posted a notice at the top of its Student Aid website confirming when borrowers should start paying their bills again.

According to the notice, interest will kick in starting September 1, but borrowers won't have to make payments until October.

“Congress recently passed legislation preventing further extensions of the payment pause,” the department said. “Interest on student loans will resume starting September 1, 2023, and payments are due from October. We will notify borrowers well in advance of resuming payments."

The pause on federal student loan payments and interest accrual was first ordered by then-President Donald Trump at the onset of the COVID-19 pandemic in an effort to ease the financial pressure Americans were facing. It has since been extended several times by both the Trump and Biden administrations.

As part of the recent bipartisan deal that suspended the US government's debt limit, the Biden administration is barred from extending the pause again.

There has been some confusion over the exact date when student loan payments will resume. Previously, the Biden administration said the payment freeze would end 60 days after the US Supreme Court issues a decision on the so-called pardon plan or 60 days after June 30, whichever date was the first.

The debt ceiling deal, which got final congressional approval earlier this month, calls for student loan payments to resume 60 days after June 30, or August 29.

The June 13 clarification also comes as the US Supreme Court is considering whether to give its blessing to the Biden administration's attempt to "forgive" hundreds of billions of dollars in debt.

At the heart of the legal challenge is whether President Joe Biden has the authority to implement his $400 billion plan, which would write off up to $10,000 in student debt for every borrower earning less than $125,000 a year. year and would write off up to $20,000 for each Pell Grant recipient who meets this income standard.

It is unclear when the Supreme Court will rule on the case. Supreme Court justices typically go on hiatus as soon as they issue the last decision of the current term, in late June or early July, and won't return to work until October 2, the official start date of the new term .

A scenario in which a conservative majority in the High Court rejects Biden's plan could spell financial hardship for millions of people, according to an analysis by the Consumer Financial Protection Bureau (CFPB), an agency of the Federal Reserve.


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The USA article: the payment of student debt starts again. 1,600 billion more to be charged to the Americans comes from Economic Scenarios .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/usa-riparte-il-pagamento-del-debito-studentesco-1600-miliardi-in-piu-da-far-pagare-agli-americani/ on Sun, 18 Jun 2023 06:00:46 +0000.