- June 20, 2023
- Posted by: Carter Davis
- Category: Forgiveness Information
On June 3rd, 2023, the President of the United States signed the Fiscal Responsibility Act of 2023. Among other things, this law codifies the termination of the Covid-19 forbearance, and places a legal prohibition on the Secretary of Education’s authority to extend the suspension of student loan payments under the CARES Act, unless expressly authorized by an act of Congress.
As a result, interest will begin to accrue on federal student loans beginning September 1, 2023. Student loan payments will become due starting October 1, 2023. Due to the long period of Covid-19 forbearance, this adjustment for borrowers to start making payments again may be a difficult one. The Department of Education has announced the implementation of a temporary grace period for borrowers who have been in repayment on their student loans prior to September 30th, 2022 and have a “financial hardship” as defined by the Department of Education.
Borrowers who qualify under those 2 conditions and who do not make their student loan payments from October 1, 2023 through September 30, 2024 will not incur the following consequences:
- The Department of Education will not place the borrower’s student loans into a default status.
- The Department of Education will not send the borrower’s student loans to collections.
Student loan interest will continue to accrue during this period.
What does this mean for Hope Credit borrowers?
If you are one of the 62% of Hope Credit clients who currently pay $0 to the Department of Education, there will be no change to your monthly student loan payment obligation. If your most recent re-certification with your Hope Credit case worker resulted in a monthly payment to the Department of Education 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.