July 10, 2023 — Article

With the payment pause ending this fall, 45 million student loan borrowers across the country will be scrambling to figure out how to manage their federal student loans when payments come due this fall. The Supreme Court’s June 30th ruling striking down President Biden’s federal student loan cancellation plan dealt a major blow to these borrowers, many of whom believed their loans would be completely or partially forgiven when the plan took effect.

For the last three years, borrowers have not had to make payments on loans held by the Department of Education (ED) and ED has stayed all involuntary collections. However, everything changes this fall: on September 1st, interest will begin to accrue and in October, payments will be due. When repayments restart, many borrowers will face challenges, including adjusting to the massive changes during the payment pause as to the entities now servicing their student loans.

The student loan landscape looks different now from where it was before the Covid-19 Pandemic. Borrowers and advocates must act quickly to familiarize themselves with new time-limited and permanent changes to the student loan system that ED implemented during the pause. This article discusses the 8 biggest changes in 2023 that will directly impact decisions and rights for many student loan borrowers:

  1. The Supreme Court on June 30th stuck down President Biden’s student loan cancellation plan.
  2. The payment pause ends in September 2023.
  3. Time-limited loan flexibilities are available to borrowers: Fresh Start for borrowers who were in default before the pandemic and a one-time Income-Driven Repayment account adjustment.
  4. A new Income-Driven Repayment plan, the SAVE plan, will go into effect on July 1, 2024 and aspects will be partially implemented by the time repayment restarts.
  5. July 1, 2023, regulatory changes are in effect regarding interest accrual, closed school discharges, borrower defense, total and permanent disability discharges, false certification discharges, and public service loan forgiveness.
  6. Student loan cancellation and forgiveness won’t result in federal tax bills through December 31, 2025.
  7. New Department of Justice policy makes discharges of student loans in bankruptcy more likely.
  8. A new rule restricts when schools participating in the federal student aid program may use mandatory arbitration and class action waivers to keep students out of court.

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