On June 3, President Biden signed the Fiscal Responsibility Act of 2023. A portion of the law mandated an end to the federal student loan payment pause. While the Biden administration had repeatedly signaled its commitment to end the program in 2023, the law provides certainty.
The law officially ends the pause on Sept. 1, 2023. While interest will start accruing on that date, it’s important to note that payments won’t be due until October. In the meantime, student loan servicers should contact borrowers with updated payment information.
The end of the payment pause is likely to kick off a repayment crisis. Up to 30 million borrowers will enter the student loan repayment system at the same time. Millions of them are at risk of delinquency and will need assistance from loan experts to find programs that match their needs. Unfortunately, the government and loan servicers lack the resources to support their numbers.
As a partial response, the Department of Education is exploring ways to cushion borrowers’ return to repayment. Meanwhile, the borrower support system is actually shrinking.
To understand the problem and how your school can address it, download Student Connection’s report “Repayment is Coming: The State of Student Loan Borrowers in 2023.” It details the systemic, economic, and personal finance trends that indicate an unavoidable repayment crisis. It also outlines a plan any school can use to help their former students successfully navigate repayment. Get the report here for free.