Student Loan Forgiveness Stalled: 5 Vital Updates for Borrowers
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A Group of Republican-led States Throws a Wrench in Biden’s Student Loan Reform Efforts
A group of Republican-led states has filed a lawsuit to block the Biden administration’s latest attempt to broadly forgive student loans. The move is just the latest in a string of legal challenges, ruling, and administrative policy changes that have left millions of borrowers in limbo.
Broad Forgiveness Faces Fresh Legal Challenge
On Thursday, a federal court in Georgia temporarily blocked the Biden administration’s new student loan forgiveness program, dubbed “Plan B,” from going into effect. The program was set to cancel an estimated $150 billion of student loan debt, starting as early as this fall.
Supreme Court Weighs in on SAVE Repayment Plan (Sort Of)
In June, two separate federal judges issued injunctions blocking key parts of the SAVE plan, a new income-driven repayment plan introduced by the Biden administration. Last week, the Supreme Court declined to lift the injunction, meaning the SAVE plan will remain on hold.
Education Department Renews Forbearance for Borrowers Already in SAVE
More than 8 million borrowers enrolled in SAVE are still in forbearance, with paused payments and no interest accruing. The Education Department has confirmed that time spent in general forbearance will not count toward borrowers’ payment history for Public Service Loan Forgiveness or forgiveness on any income-driven repayment plan.
Harsh Consequences of Missed Payments Slated to Return
Protections aimed at easing borrowers back into repayment over the past year are set to expire on September 30. After the expiration, borrowers who miss payments will face harsh consequences, including the potential for default, delinquent status, and damage to their credit score.
The Timeline for the Legal Fight Extends Past Election
The timeline for the legal challenges to the Biden administration’s student loan relief plans is uncertain, with no clear end in sight. Federal court cases can take anywhere from several months to potentially years, and there is a chance that both SAVE and the second forgiveness plan could be appealed to the Supreme Court.
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