- November 22, 2022
- Posted by: Carter Davis
- Category: Forgiveness Information
On Tuesday November 22nd, 2022 the U.S. Department of Education announced an extension of the Covid-19 student loan payment pause that was scheduled to end December 31, 2022. The extension means that Direct student loan borrowers are not required to make monthly student loan payments, and that 0.00% interest will accrue on borrowers’ student loan balances during this time. The forbearance has been extended until:
- 60 days after June 30, 2023 which is August 29th, 2023 OR
- 60 days after “the Department is permitted to implement the program or the litigation is resolved” per the statement by the U.S. Department of Education
What does this mean for Hope Credit borrowers?
The announcement of any extension to the Covid-19 Student Loan Forbearance first enacted in March of 2020 means that all Hope Credit clients will continue to enjoy $0.00 monthly payments toward their student loans and 0.00% interest during the time of the extension, potentially saving hundreds or thousands of dollars per month.
However, the announced end date of this extension is different than other extensions and will have a profound effect on student loan borrowers’ financial planning. The end date of this extension is unpredictable. The extension could continue all the way through August 29th, 2023, providing student loan borrowers with 9 more months of relief. However, the U.S. Supreme Court could adjudicate the 2 cases blocking or vacating the blanket forgiveness program in a relatively short time frame, causing the extension to come to an end 60 days after that unknown date, and sooner than the August 29th, 2023 date. For roughly 62% of Hope Credit student loan borrowers, the monthly payment would remain $0.00 due to the income based forgiveness programs, however 38% of Hope Credit borrowers would have to arrange to begin making monthly payments with just 60 days notice. In the event that the U.S. Supreme Court adjudicates all of the lawsuits that are currently vacating or staying the blanket forgiveness program, and does so in a manner that the U.S. Department of Education regards as “resolved”, Hope Credit will immediately notify all clients to begin the next steps toward resuming payments under the income based forgiveness programs that have been federal law for more than 25 years.