Covid Student Loan Pause
On Tuesday, November 22, 2022, the U.S. Department of Education announced an extension of the Covid-19 student loan payment pause, which was previously scheduled to end on December 31, 2022.
This extension allows Direct student loan borrowers to:
- Avoid making monthly student loan payments
- Continue benefiting from 0.00% interest accrual on their loan balances
Covid Student Loan Pause When Will the Student Loan Forbearance End?
The forbearance extension will remain in effect until one of the following conditions is met:
- 60 days after June 30, 2023 – making the official end date August 29, 2023 OR
- 60 days after the Department is permitted to implement the program or the litigation is resolved, according to the U.S. Department of Education.
This means that the actual end date remains uncertain, depending on legal proceedings related to the student loan forgiveness program.
What Does This Mean for Hope Credit Borrowers?
For borrowers enrolled with Hope Credit, this extension means:
- Continued $0.00 monthly payments on federal student loans
- No interest accrual during the extension period
- Potential savings of hundreds or thousands of dollars per month
Covid student loan pause The Uncertainty of the Extension End Date
Unlike previous forbearance extensions, this one introduces an uncertain end date, making financial planning more challenging for student loan borrowers.
- The extension could last until August 29, 2023, providing nine more months of relief.
- However, if the U.S. Supreme Court makes a ruling on the pending cases that are blocking or vacating the student loan forgiveness program, the extension could end earlier – just 60 days after that decision.
How This Affects Hope Credit Clients
- 62% of Hope Credit borrowers will remain on a $0.00 monthly payment under income-driven repayment plans (IDR).
- 38% of Hope Credit borrowers will need to prepare to resume student loan payments with only 60 days’ noticeif the legal situation changes.
Next Steps for Borrowers
If the U.S. Supreme Court resolves the lawsuits affecting student loan forgiveness, and the U.S. Department of Education confirms the case as “resolved”, Hope Credit will:
- Immediately notify all clients about the next steps
- Assist borrowers with resuming payments under income-based forgiveness programs
- Provide guidance on long-term student loan repayment options
Final Thoughts
The Covid-19 student loan forbearance extension provides temporary relief, but its end date is uncertain due to ongoing litigation. Student loan borrowers should stay informed and be prepared for potential changes in repayment requirements.