Debt Ceiling Deal Would End Student Loan Payment Pause
Credit: Image Credit: MANDEL NGAN / AFP / Getty Images- Over the Memorial Day weekend, President Joe Biden agreed on a deal to raise the debt ceiling with House Speaker Kevin McCarthy.
- The proposal would end the student loan payment pause 60 days after June 30.
- That would mean the pause would cease near the end of August.
- Borrowers have not had to make payments on federal student loans since March 2020.
The end to the pause on federal student loan payments for millions of borrowers is now within sight.
Over the Memorial Day weekend, House Speaker Kevin McCarthy and President Joe Biden reached a compromise that would raise the federal debt ceiling through 2024 and include a concrete end to the student loan payment pause that has been in effect since March 2020.
The proposed deal would end the pause 60 days after June 30, which means borrowers would have to resume payments on their loans Aug. 29.
Biden’s previous extension of the pause was set to expire July 1, but the legislation, if it passes in the coming days, would prevent him from issuing another extension.
The Department of Education (ED) has repeatedly extended the pause on federal student loan payments throughout the COVID-19 pandemic. The department’s last extension at the end of 2022 sought to give the U.S. Supreme Court time to rule on the president’s one-time debt forgiveness plan that would erase up to $20,000 in federal student loan debt per borrower making less than $125,000 per year.
The Supreme Court is expected to hand down a decision this summer.
However, no matter the court’s decision, the debt ceiling bill would disallow ED from extending the pause any further.
“Except as expressly authorized by an act of Congress … the secretary of education may not use any authority to implement an extension of any executive action or rule,” the bill states.
McCarthy, the Republican speaker of the U.S. House of Representatives, touted the planned end to the pause on Fox News on Sunday.
“That is another victory because that brings in $5 billion each month to the American public,” McCarthy said.
While McCarthy and the White House have agreed on this debt ceiling deal, the bill must still pass through both chambers of Congress.
The U.S. government is expected to hit the debt ceiling in early June, so leaders on both sides of the aisle will need to quickly whip up enough votes for the deal to reach Biden’s desk as soon as possible, or else the U.S. may begin to default on its debts.