It's time to pay the piper for millions of student borrowers around the country. October 1 marks the end of the unofficial grace period for student loan repayments, meaning missed payments will no longer be automatically converted to forbearance and will now count toward delinquency. Although the pandemic pause on loan payments officially ended last October, the Biden administration created a one-year "on-ramp" to remove most penalties for late or non-payments, although interest has still accrued on loans since last year.
That on-ramp is ending now. This process was set in motion in June 2023, when the U.S. Supreme Court struck down the Biden administration's plan to cancel more than $400 billion in student debt, ruling that such a move can only be done by Congress. Nevertheless, the administration has continued to push ahead with the effort. "Most presidents would get the signal (from the Supreme Court)," says John Yoo, former Deputy Assistant Attorney General in an interview with Fox News. "Instead, President Biden and his aides went back and tried to find every little nook and cranny they could to create smaller programs to try to cancel debt, efforts to stretch out payments, or to essentially say we're gonna modify your loan so you don't really have to pay anything every month."
So far, the courts have blocked these end-around attempts by Biden, leaving them all on hold. That means for most borrowers, loans and payments are now due again just as they were before the pandemic. "Almost every judge that has encountered these new programs in lower courts has halted them, because they say the Supreme Court already said a year ago that you can't cancel student debt," says Yoo. "But the Biden administration keeps trying, because I think they have a fundamental disregard for our Supreme Court justices."
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