President Joe Biden's administration had already said student loan repayments...

President Joe Biden's administration had already said student loan repayments would resume as early as the end of August. Credit: AP/Susan Walsh

The pandemic pause in repaying student loans was never meant to be permanent. Now, the nation's debt ceiling agreement, if approved by both houses of Congress and signed into law, will officially end the pause.

About 45 million Americans hold outstanding student loans totaling about $1.76 trillion. Most of that is in federal loans.

Here's what to know to get ready to start paying back loans: 

When will repayments resume?

President Joe Biden's administration had already said repayments would resume as early as the end of August. However, the debt ceiling agreement struck Saturday between the Biden administration and Republican House Speaker Kevin McCarthy bars the administration from extending the pause without the express approval of Congress. There have been several extensions since the pause was put in place at the start of the pandemic in March 2020.

Can repayments be paused again in future emergencies?

The Biden administration says yes. Education Secretary Miguel Cardona said in a statement praising the agreement, "The deal also protects our ability to pause student loan payments should that be necessary in future emergencies.” 

What can I do to prepare for resuming payments?

Betsy Mayotte, president of The Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended. Instead, she says, put what you would have paid into an interest-bearing savings account. Mayotte recommends borrowers use the loan-simulator tool at studentaid.gov or the one on TISLA’s website, freestudentloanadvice.org, to find a payment plan that best fits their needs. The calculators tell you what your monthly payment would be under each available plan, as well as your long-term costs.

Katherine Welbeck of the Student Borrower Protection Center recommends logging in to your account and making sure you know the name of your servicer and your due date. Assess your financial situation annually and research which repayment plan is best for you. If you are on an income-driven repayment plan — it sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size — go to studentaid.gov to learn about which of those plans are best for you or to apply for one. 

What about Biden's student loan forgiveness plan?

That's up in the air as the U.S. Supreme Court considers whether a president has the executive authority to enact loan forgiveness without congressional approval. Two lawsuits against the plan could be decided before the end of June. The conservative-majority court expressed skepticism about the plan during oral arguments last February.

What would the plan do if it is allowed to go into effect?

It would cancel up to $20,000 in federal loan debt for Pell Grant recipients, and up to $10,000 for single people earning up to $125,000, $250,000 for married couples. It would cut in half monthly repayments on remaining undergraduate debt and make further adjustments to the Public Service Loan Forgiveness Program. It estimates that up to 43 million borrowers could get some relief, with full debt cancellation for roughly 20 million.

Is it possible to get loan forgiveness now?

Yes. Studentaid.gov lists who is currently eligible for some federal student loan forgiveness. The list includes some teachers and those in public service, students or parent borrowers suffering death, permanent disability or bankruptcy, and students from schools that closed or made false or fraudulent claims.

With AP

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