Policy Matters Blog
In This Section
Get Ready: Student Loan Payments Will Resume at the End of Summer
This past weekend, President Biden signed the Fiscal Responsibility Act of 2023 (H.R. 3746) into law after a contentious and highly publicized national debate about raising the debt ceiling. While this agreement avoids the United States defaulting on its debt, it also has implications for federal education funding and student loan borrowers.
Student Loan Borrowers
H.R. 3746 terminates the suspension of payments on federal student loans and resumes the accrual of interest and collections. This means that after August 30, 2023*, federal student loan payments will resume after more than 3 years of being paused. If you have federal student loans, it is important that you are prepared to resume making payments so that you are not held liable for late payments or lack of payment. If you need more information on student loan payments and your federal student loans, please visit www.StudentAid.gov for more information, guidance, or to connect with your student loan servicer about repayment options. You are welcome to reach out to NASP Policy and Advocacy Staff with any questions, but please know we cannot give you financial advice.
Federal Education Funding
Regarding federal education funding, the bill rescinds unobligated funds from specified COVID relief accounts, including those provided by the Elementary and Secondary School Emergency Relief (ESSER) fund. Unobligated funds refer to monies that have not been designated to a specific awardee or project and are not the same as unspent funds. Ultimately, approximately $392 million of education funding will be rescinded, which is less than 0.2% of the total $308 billion that the Department of Education was provided for COVID relief. This low number of unobligated funds shows how well received the ESSER fund and other COVID relief funds were by local and state education agencies, which have been historically underfunded, and institutions of higher education.
Additionally, discretionary spending levels have been capped under the debt ceiling deal. While the full impact on FY 2024 nondefense discretionary funding, which includes most of the Education Department's 120-plus programs, is unknown, it is likely that funding will be near FY 2023 levels. This means that many programs will likely be held at the same funding level as this fiscal year. The outcome of level funding would undoubtedly be much better than the deep cuts to education funding that were being floated at the beginning of the debt ceiling negotiations (20% or more).
However, level funding in FY 2024 could mean that no new competitions for the School-Based Mental Health Services grant and the Mental Health Service Professional Demonstration grant will be held. These grants are key to national, state, and local efforts to address the critical shortages of school psychologists and other school-based mental health professionals. As a school psychologist, NASP member, and constituent, your voice is our most powerful tool to advocate for more funding for these grants. Please join NASP in urging your Senators and Representative to support additional investment. Take action today and send a letter to your Members of Congress through our Advocacy Action Center! It takes less than 2 minutes and makes a huge difference.
*Update as of June 13, 2023: Additional clarification has been provided by the Department of Education regarding when student loan repayments will begin. Student loan interest will resume starting on September 1, 2023, and payments will be due starting in October. Be on the lookout for communications from the Department and your lender about when payments on your existing loans will resume.