When the freeze on federal student-loan payments, interest and collections ends this fall, borrowers will be protected temporarily from some of the harshest consequences of missing student-loan bills. But if borrowers can afford to make their payments, they should.
Kvaal’s comments came a little more than a week after the U.S. Supreme Court struck down the Biden administration’s plan to cancel up to $20,000 in student debt for a wide swath of borrowers. Biden administration officials had argued both in court and elsewhere that without mass debt forgiveness, the return to repayment after the COVID-era payment pause would result in a wave of delinquency and default.
But during his remarks, Kvaal ticked off some of the ways in which this grace period differs from the COVID-era student-loan pause. For one, interest will start accruing on borrowers’ student loans in September; during the COVID pause, interest didn’t build on borrowers’ loans. Borrowers will also be receiving student-loan bills starting this fall, which wasn’t supposed to happen during the COVID freeze.
With this second attempt, the Department of Education will be convening stakeholders to hash out the actual rule it will use for the debt cancellation plan. “A rulemaking process often takes a year or longer, but I can tell you in this case we’re going to do everything we can to move as quickly as possible,” Kvaal said.