Student loan payments to resume in October

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Student loan payments overview: 

• Who: The U.S. Department of Education announced that the student loan repayment pause will end in October. 
• Why: The decision comes after Congress passed a law that included a provision to officially end the student loan repayment pause. 
• Where: The decision affects student loan borrowers nationwide. 
• What are my options: Check out student loan refinancing options with Credit Karma.

The U.S. Department of Education has announced that federal student loan repayments will officially resume in October, putting an end to a three-year-long pause that was put in place during the COVID-19 pandemic. 

The decision affects the around 40 million Americans saddled with student-loan debt that results in an average monthly bill of roughly $350, NBC reports. 

Former President Donald Trump put a stay on the repayment of student loan debt — along with the accrual of interest — in March 2020, with the nation reeling from the onset of the COVID-19 pandemic.

The pause on student loan repayment has since been extended eight times, while almost everyone eligible has taken advantage of the stay — with only 1% of qualifying borrowers reportedly continuing to make payments. 

According to analysis by higher education expert Mark Kantrowitz, student-loan borrowers have likely saved around $15,000 in payments as a result of the stay, CNBC reports. 

Congress recently passed law preventing further extensions of student loan repayment pause

The Education Department, as part of its decision to end the pause in the fall, cited the recent passage of a law by Congress that will prevent further extensions of the student loan repayment pause. 

The law, which was signed by President Joe Biden earlier this month, was the result of an agreement between Republicans and Democrats to raise the nation’s debt ceiling, CNBC reports. 

The agreement, which included a demand by Republicans for large cuts to federal spending in exchange for voting to increase the borrowing limit, also contained a provision to officially end the student loan repayment pause at the end of August. 

The Education Department said borrowers can expect to have to make their first student loan repayment in October, with interest on the debt to begin accruing again Sept. 1. 

In March, SoFi Bank filed a lawsuit against the Department of Education and its secretary, Miguel Cardona, over claims the eight-times-extended student loan repayment pause was unlawful and cost the bank hundreds of millions of dollars in lost business. 

What are your thoughts on the decision to end the student loan repayment pause? Let us know in the comments!

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