Student Loan Pause: What We Know For 2023
Because of the Covid-19 pandemic, the Department of Education implemented a loan repayment pause on federal student loan payments. The school loan extension program has been renewed several times as the pandemic continued and continues to impact the economy and people's ability to make their student loan payments.
During the student loan pause, President Biden moved to cancel student loan debt which has been challenged in the courts, making things even more confusing. We'll look at what we know about the student loan debt cancellation program and the Covid-19 loan payment pause in 2023.
Student loan debt cancellation
In 2022, President Biden announced a one-time debt relief program provided by the US Department of Education. Borrowers who received a Federal Pell Grant in college and met the income requirements were eligible for up to $20,000 in student loan debt relief.
Borrowers who did not receive a Federal Pell Grant and meet the income requirement were eligible for up to $10,000 in student loan debt relief.
These are the income requirements for tax years 2020 or 2021; the numbers represent adjusted gross income (AGI):
Single filers: Under $125,000
Married, filing separately: Under $125,000
Married, filing jointly: Under $250,000
Head of household: Under $250,000
Qualifying widow(er): Under $250,000
Since the plan was announced, there have been several court cases filed. The result is that while borrowers could apply for the student loan debt forgiveness program, until there is a final ruling, the program is on hold.
The case will be argued in front of the Supreme Court in February 2023. At that time, it will be decided if President Biden has the authority to cancel student loan debt or if the program overreached that authority.
Student loans payment pause
In early 2020, the Covid-19 pandemic hit the entire world. Millions of people lost their jobs, and the government took action to help those financially impacted. One of those moves was the Covid-19 Emergency Relief Flexibility program:
March 20, 2020: The office of Federal Student Aid granted temporary relief for ED (Department of Education) owned federal student loans, which suspended student loan payments, halted collections on defaulted loans, and set interest rates at 0%.
March 27, 2020: Relief was granted through September 30, 2020.
August 8, 2020: Relief was granted through December 31, 2020.
December 4, 2020: Relief was granted through January 31, 2021.
January 20, 2021: Relief was granted through at least September 30, 2021.
March 29, 2021: Relief measures were added for borrowers in the TPD (Total and Permanent Disability) discharge process.
March 30, 2021: Relief measures were expanded to include federal student loans made through the Federal Family Education Loan (FFE)) program that were in default.
August 6, 2021: Relief was granted through January 31, 2022.
December 22, 2021: Relief was granted through May 1, 2022.
April 6, 2022: Relief was granted through August 31, 2022.
August 24, 2022: Relief was granted through December 31, 2022.
November 22, 2022: Relief measures were extended.
Relief was first granted in March 2020 and extended ten times. You might notice the last extension granted on November 22, 2022, has no end date. But the end of the program does seem to be coming. At the time of writing, December 30, 2022, payments are set to resume either 60 days after the Supreme Court ruling or June 30, 2023, whichever comes first.
We will update this article as there are new developments.