The Senate passed legislation late Thursday to raise the debt ceiling, avoiding a government shutdown. A provision in the bill officially terminates the student loan repayment suspension period. Student loan repayment will resume sixty (60) days after June 30, 2023. Borrowers should expect to receive their billing statements around September 1st, at least 21 days ahead of their payment due date.

The bill prohibits the Secretary of Education from extending the payment pause without congressional approval. However, Secretary Miguel Cardona has made it clear that he is committed to the current timeline for repayment resumption.

Supreme Court Decision on Student Loan Cancellation Still in Play

The Biden administration’s proposal for a one-time cancellation of up to $20,000 in student loans is currently awaiting a Supreme Court decision. Student loan repayment is set to resume 60 days after the SCOTUS decision or 60 days after June 30, whichever comes first. Experts believe SCOTUS won’t issue a decision until mid-to-late June anyway, so it’s unlikely a repayment date will be set earlier than September 1.

Borrowers are expected to struggle when repayment resumes. The one-time cancellation would provide welcome relief but wouldn’t completely eliminate student loan payments for the majority of college graduates.

Servicers, Borrowers, and Schools Have Three Months to Prepare for Repayment Reentry

The U.S. Department of Education is committed to a smooth reentry to repayment, but recent budget cuts have reduced staff and hours for servicers. Nelnet recently laid off over 500 employees and ended weekend servicing hours. Borrowers are going to see long hold times and delays in processing paperwork. Third-party servicers like ION are available to help borrowers if they can’t get through to their federal servicer.

Richard Cordray, the chief operating officer of Federal Student Aid, testified before a House committee that FSA recognizes the challenges ahead and encourages borrowers to enroll in income-driven repayment plans before the pause ends.

Schools must use this time to implement default aversion plans so borrowers can enter sustainable repayment plans such as IDR. Contact to request our Return to Repayment Playbook.