50+ Lifestyles

One Provision of Fiscal Responsibility Act of 2023

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

The student loan repayment pause will end August 30 after the White House and Congress reached a deal, according to CNBC. The deal, which President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) agreed on, marks an official date for the pause on loan repayments. The debt ceiling bill passed by Congress establishes that the paused student loan payments will restart at the end of August. Interest will also restart at that time. The Supreme Court must decide on the legal implications of the Biden student loan forgiveness plan, which was not addressed in the debt ceiling bill and would forgive as much as $20,000 for eligible borrowers. The court’s decisions were expected sometime before the end of June. But as of this writing not yet determined.

Let’s look at some of those student loan debt statistics:

• Americans owe $1.78 trillion in federal and private student loan debt as of the first quarter of 2023. That’s up 1.1% from the 4th quarter of 2022. $127.2 billion of this is private student loan debt.
• Students and parents borrowed an estimated $94.7 billion in the 2021-2022 academic year. 46% of this was federal unsubsidized loans. 16% was federal subsidized loans, 13% was Grad Plus loans. 13% was private or other nonfederal loans and 11% was Parent Plus loans.
• 54% of the class of 2021 bachelor’s degree recipients graduating from four-year public and private colleges had student loan debt. They left school with an average of $29,100 in federal and private student loan debt.
• 45.3 million borrowers have federal student debt as of the second quarter of fiscal year 2022.
• 0.67% of student loans were 90 days or more delinquent as of the 1st quarter of 2023.
• The pause on governments-held federal student loan payments has been extended eight times since March 2020. It’s now set to end once a resolution is reached on student loan forgiveness. If not, payments will restart 60 days after June 30, 2023.

The student loan pause is scheduled to end 60 days after June 30. That would be August 29. Since March 2020, interest rates have been set at zero percent for all government-held federal student loans. But after August 29, interest will start accruing again. The first billing due dates for most borrowers after the student loan pause ends should be in late September or October.

During this month of July and August we continue with our Virtual Community Meetings on Medicare. Call today to attend: (563) 332-2200.

Richard J. Schillig, CLU, ChFC, LUTCF is an Independent Insurance and Financial Advisor with RJS and Associates, Inc. He can be reached at (563) 332-2200.