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 May 29, 2023

Debt ceiling deal ends pause on student loan payments

According to House Speaker Kevin McCarthy (R-CA), the debt ceiling deal that he and President Joe Biden have reached will put an end to the pause on federal student loan payments. 

McCarthy, according to The Hill, indicated as much on Sunday during an appearance on the Fox News Channel's Fox News Sunday. 

There, McCarthy said, "the pause is gone within 60 days of this being signed."

Prior to the 2022 midterm election, Biden unveiled a plan to cancel up to $10,000 of student loan debt per borrower or up to $20,000 if the borrower is a Pell Grant recipient. To qualify, a borrower must make less than $125,000 if single or less than $250,000 if married.

The legality of the plan was immediately challenged in court considering that Biden attempted to enact the plan through executive action alone. The courts placed Biden's plan on hold, and the matter is now before the U.S. Supreme Court.

In the meantime, while awaiting the Supreme Court's decision, Biden has placed a pause on federal student loan payments. It is this pause that McCarthy is referring to above.

During his Fox News Channel appearance, McCarthy said:

What the president did, he went unconstitutionally and said he was going to waive certain people part of their debt for student loan[s], but then he paused everybody’s student loan. So, everybody who borrowed a student loan within 60 days of the signing is going to have to pay that back.

What this means, in reality, is that student loan payments could resume about a month earlier than expected.

McCarthy added:

The Supreme Court is taking up that case. But if the Supreme Court came back and said that [the waiver] was unconstitutional, the president could still say he’s pausing, not waiving it. But now that this is in law, the Supreme Court decision will have to be upheld, that they would have to pay.

In other words, no matter what the Supreme Court says student loan payments will resume under the debt ceiling deal agreed to by McCarthy and Biden.

McCarthy called this "another victory" because it "brings in $5 billion each month to the American public."

Education Secretary Miguel Cardona also released a statement on this part of the debt ceiling deal.

Cardona Sunday on Twitter wrote:

Despite Republicans’ efforts to end targeted student debt relief and move up our planned end to the payment pause, we will ensure a smooth return to repayment process. The deal also protects our ability to pause student loan payments should that be necessary in future emergencies.

In a subsequent tweet, Cardona said that the administration "will continue fighting for student borrowers."

Written By:
Oliver Winters

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