and it won’t hurt their credit scores. Interest will resume in September, however, and it will accrue whether borrowers make payments or not. Biden reiterated that it is not the same as the student loan pause, adding that “if you can pay your monthly bills, you should.”
To determine whether deferment or forbearance are good options for you, contact your loan servicer. One thing to note: Interest still accrues during deferment or forbearance. Both can also affect future loan forgiveness options. Depending on the conditions of your deferment or forbearance, it may make sense to continue paying the interest during the payment suspension.
In November, the Justice Department announced a process with new guidelines for students with federal loans who are unable to pay. Under the new guidance, debtors will fill out an “attestation form,” which the government will use to determine whether or not to recommend a discharge of debt. If borrowers’ expenses exceed their income and other criteria are met, the government will be more likely to recommend a full or partial discharge of loans.
The process of negotiated rulemaking requires a period for written feedback from the public, a public hearing and negotiating sessions. Some advocates had been urging Biden go this route all along, and the White House says it’s confident the plan will work. But it’s almost certain to face legal challenges. The Education Department has used the Higher Education Act to cancel student loans before, but never at the scale being discussed now. Backers including Sen. Elizabeth Warren have said the legal authority is clear, but lawyers for the Trump administration concluded in 2021 that mass student loan forgiveness was illegal.