Biden's Education Secretary confirms the process of resuming student-loan payments will start 'no later than June 30': 'The emergency period is over'

Education Sec. Miguel Cardona
Education Secretary Miguel Cardona.GREG NASH/POOL/AFP via Getty Images
  • Education Secretary Miguel Cardona confirmed his commitment to resume student-loan payments this year.

  • "The emergency period is over," he said at a Senate appropriations hearing.

  • Payments are set to resume 60 days after June 30 or 60 days after a Supreme Court debt-relief decision.

President Joe Biden's education secretary confirmed that another extension of the student-loan-payment pause was not on the horizon.

On Thursday, Education Secretary Miguel Cardona testified before the Senate Appropriations Committee about his budget request and plans for the upcoming fiscal year. With Biden's plan to cancel up to $20,000 in student debt in limbo and awaiting a final decision from the Supreme Court, some lawmakers asked Cardona what the year ahead would look like for borrowers.

In light of the conservative-backed lawsuits that paused the broad debt relief, Biden extended the student-loan-payment pause through 60 days after June 30 or 60 days after the Supreme Court issues its final decision. That was the eighth extension of the pause, and Cardona confirmed that it would be the last.

"We recognize that during the pandemic, that was very difficult for borrowers. And we are committed to making sure that once the decision is made, that we're going to resume payments for 60 days after, but no later than June 30," Cardona said during the hearing, referring to the Supreme Court decision. "We're going to begin that process."

He said: "We recognize that our borrowers need information and they need a long on-ramp because it has been three years of resuming payments.

"We're confident, Senator, that the Supreme Court will rule in favor of the targeted debt relief, providing relief for millions of borrowers, and we want to make sure that the information that borrowers get is accurate. We do plan on making sure it's a smooth reentry to repayment."

He added: "The emergency period is over, and we're preparing our borrowers to restart."

As Insider previously reported, the department has started communicating with student-loan companies to prepare borrowers to resume repayment. According to documents first obtained by Politico, the department said that the companies should prepare to resume charging interest on borrowers' loans in September and the department expects borrowers to make their first monthly payment in October. Companies are also required to notify borrowers of the payment resumption after August 31.

The department is preparing to overhaul the student-loan-repayment system over the upcoming years. That includes implementing a new income-driven repayment plan that the department previously said would be "the most affordable repayment plan ever," along with carrying out reforms to targeted debt-relief programs such as Public Service Loan Forgiveness. Notably, many of these reforms depend on increased funding from Congress for Federal Student Aid.

"FSA has been working on fixing a system which includes Public Service Loan Forgiveness. It includes making sure we're providing federal loan servicing," Cardona said Thursday. "So the work of the budget that we're requesting is critical for those services to be administered."

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