Student Loan Covid Forbearance Ends As A Result Of Federal Budget And Debt Ceiling Compromise

Student Loan Forbearance Ends. Understanding Covid-19

On June 3rd, 2023, the President of the United States signed the Fiscal Responsibility Act of 2023 into law. This legislation officially ends the Covid-19 forbearance and prohibits the Secretary of Education from extending the suspension of student loan payments under the CARES Act, unless explicitly approved by Congress.

Student Loan Forbearance Ends When Do Student Loan Payments Resume?

• Interest Accrual Resumes: Starting September 1, 2023, federal student loan interest will begin accruing again.
• Payments Become Due: Borrowers will need to resume student loan payments beginning October 1, 2023.

Many borrowers have gone nearly three years without making payments, and this sudden shift may create financial strain. Recognizing this challenge, the Department of Education has introduced a temporary grace period to help ease the transition.

Temporary Student Loan Grace Period (October 1, 2023 – September 30, 2024)

To assist borrowers, the Department of Education has implemented a 12-month grace period for those who:

1. Were in repayment on their student loans before September 30, 2022.
2. Have a financial hardship, as defined by the Department of Education.

What Does This Grace Period Include?

If you qualify under these conditions and do not make your student loan payments from October 1, 2023, to September 30, 2024, you will:

✅ Avoid Default – Your student loans will not be placed into default status.
✅ Avoid Collections – Your student loans will not be sent to collections agencies.
❌ Interest Will Still Accrue – Even though you won’t face penalties, student loan interest will continue to accumulate.

How Does This Affect Hope Credit Borrowers?

If you are among the 62% of Hope Credit clients who currently pay $0 to the Department of Education, your monthly student loan payment obligation will not change. However, if your most recent re-certification with your Hope Credit case worker resulted in a monthly payment, you should prepare for payment resumption starting in October 2023.

Student Loan Forbearance Ends – How to Prepare & What to Do Next

To prepare for this transition, borrowers should:

✔️ Review their student loan balance and interest rates.
✔️ Check eligibility for income-driven repayment (IDR) plans to lower payments.
✔️ Update contact information with their loan servicer to receive critical updates.
✔️ Monitor student loan relief options in case new legislation provides additional support.

Final Thoughts

 Student Loan Forbearance Ends. The end of Covid-19 marks a significant shift for millions of borrowers. While the grace period offers some protection, it is crucial to prepare for student loan payments resuming in October 2023. Borrowers should take proactive steps to manage their finances, explore repayment options, and stay informed on federal student loan relief programs.

For assistance with student loan repayment strategies, contact Hope Credit or your loan servicer to explore available options.on that is greater than $0, please contact your case worker prior to October 1, 2023 to ensure that your student loan payments stay on track or options to further delay repayment are utilized.