There have been some new developments since our last blog: “Federal Loan Repayment: Where do you Stand in 2022.”
There is no doubt that the Direct Loan Repayment pause, and Student Loan Cancellation can be both confusing and difficult to stay in the know about. With constant announcements, and varying degrees of updates, you may be asking, can’t somebody please tell us WHAT is going on?
What is the latest news?
Per the Department of Education:
“Payments will resume 60 days after the Department is permitted to implement the program or the litigation is resolved, which will give the Supreme Court an opportunity to resolve the case during its current Term. If the program has not been implemented and the litigation has not been resolved by June 30, 2023 – payments will resume 60 days after that.”
In laymen’s terms, if the debt cancellation dispute does not get resolved by the end of June, repayment may resume as soon as August 31 or September 1, 2023.
As you can imagine, debt cancellation has been thrown in flux as a result of these lawsuits. Debt cancellation may be ultimately determined by the higher court. Borrowers who visit studentaid.gov to fill out the loan cancellation application will not be able to do so, and instead will see this message:
“Student Loan Debt Relief Is Blocked – Courts have issues orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders. If you’ve already applied, we’ll hold your application. Subscribe and check back here for updates. We will post information as soon as further updates are available.”
So, What Do I Do Now?
Borrowers should consider using this additional time to ensure their contact information is up to date with their Loan Servicers. They should also consider enrolling in electronic debit and income driven repayment plans, to support a smooth transition to repayment in the future. A review of income driven repayment plans can be found directly from the Department of Education, here.
To stay abreast of constant changes in higher education and even debt cancellation, consider following us for more information by visiting our Facebook, Instagram, or even our LinkedIn. We are closely monitoring the situation to help demystify the overall process so that YOU can understand what is happening better!