Student borrowers reminded not to start repayments in January

The federal government has reminded student-loan borrowers that they don't need to worry about repaying their debt in January.

While lawsuits against President Joe Biden's targeted loan relief are pending in court, the Department of Education pointed out that borrowers can hold off on making payments for a little while longer. 

"You will NOT have to make your loan payments that would have been restarted in January," the Education Department said in an email sent to borrowers Friday morning. 

"We don't think it is right to ask borrowers to pay on loans they wouldn't have to pay were it not for the lawsuits challenging the program," the email said.

Millions of borrowers in limbo

Student loan repayments have been on hold since the beginning of the coronavirus pandemic. However, Mr. Biden's plan to permanently forgive up to $20,000 in student loans is in limbo as two separate lawsuits challenging the debt forgiveness have made their way to the Supreme Court's docket. Arguments in the cases are set to take place in late February or early March.

The administration earlier extended the temporary pause on payments until June 30 to give the Supreme Court time to decide the case. 

If the court were to rule in favor of the administration, "millions of borrowers would be making payments they may not owe, or payments that are higher than they should be," the email said. 

Payments will restart 60 days after the high court announces its ruling. If the court doesn't decide by June 30, payments will restart on August 31, according to the email.

Meanwhile, millions of Americans who have applied for loan relief are waiting for a decision: They were told their debt-forgiveness applications were approved, but that the government can't legally void their debt while the lawsuits are ongoing.

The government maintains that its plan to forgive $10,000 in debt and $20,000 for low-income borrowers is legal and would provide much-needed relief.

"Targeted student debt relief addresses the financial harms of the pandemic, helps smooth borrowers' transition back to repayment and helps borrowers at highest risk of delinquencies or default," the Friday email said. 

In:
• Student Debt
• Student Loan

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