Student Loans in Debt Ceiling Deal Leave Millions Facing Nightmare Scenario


Millions of Americans will have to start making student loan repayments soon as part of the debt ceiling deal by President Joe Biden and House Speaker Kevin McCarthy while facing the possibility that debt relief may not come.

Details of the debt ceiling deal were released on Sunday in the form of a 99-page bill that would suspend the nation’s debt limit through 2025 to avoid a federal default while limiting government spending.

The GOP proposal to rescind Biden’s plan to waive $10,000 to $20,000 in debt for nearly all borrowers did not make it into the package.

But Biden agreed to put an end to the pause on student loan repayment. The pause has been in effect since the start of the coronavirus pandemic three years ago.

The bill states that the pause will end 60 days after June 30, meaning payments would resume in the final days of August.

Student loan borrowers stage a Sit-In on Capitol Hill at the office of U.S. Speaker of the House Kevin McCarthy (R-CA) to urge him to stop trying to block student debt cancellation on May 09, 2023 in Washington, DC. The proposed debt ceiling deal will end the pause on student loan payments.
Jemal Countess/Getty Images for We, The 45 Million

The House will vote on the legislation on Wednesday, McCarthy said, allowing the Senate time to consider it before a June 5 deadline to avert a disastrous federal default.

Meanwhile, the fate of Biden’s debt relief plan will be decided at the Supreme Court.

In oral arguments earlier this year, the court’s conservative majority expressed deep skepticism over the legality of the plan. A decision is expected before the end of June.

Up to 43 million Americans could benefit from the relief. And the Biden administration has said that 16 million out of the 26 million who have applied for relief have been approved.

The pause on payments was already planned to end either 60 days after the lawsuit challenging the plan is resolved or if not resolved by June 30, then 60 days after that.

The news that the debt ceiling legislation would codify the end of the pause on student loan repayments before the Supreme Court’s decision sparked concern and anger.

“Resuming student debt payments will crush working families and is simply bad policy—but agreeing to codify the pause’s end into law before the Supreme Court decides on broad-scale relief is criminal,” tweeted The Debt Collective, a union of debtors.

“We are deeply concerned about the debt-ceiling bill ending the pause on federal student loan payments,” the nonprofit Student Debt Crisis Center wrote on Twitter.

“Take action now and tell @POTUS to keep payments paused until debt is canceled.”

Some welcomed the end of the pause, while others praised Biden for protecting his relief plan in the deal.

“I applaud @POTUS for averting a crisis with this deal and for protecting our student debt relief plan in full,” Education Secretary Miguel Cardona wrote on Twitter.

“Despite Republicans’ efforts to end targeted student debt relief and move up our planned end to the payment pause, we will ensure a smooth return to repayment process,” Cardona added.

“The deal also protects our ability to pause student loan payments should that be necessary in future emergencies.”

He added: “I thank President Biden and his team for looking out for the 40 million hard-working Americans who will benefit from student debt relief and protecting our new and improved Income Driven Repayment plan. We will continue fighting for student borrowers.”

Newsweek has contacted the White House and McCarthy’s office for comment via email.


Please enter your comment!
Please enter your name here