Loading...
On Tuesday, the U.S. Supreme Court began hearing two cases challenging President Joe Biden’s student loan forgiveness plan, which would forgive up to $20,000 in debt for more than 40 million Americans. However, due to legal challenges, all the relief has been put on hold, and the Education Department stopped taking applications in November.
The plan Biden announced last August would cancel $10,000 in federal student loan debt for those earning less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically come from lower-income households, would receive an additional $10,000 in debt forgiveness for $20,000. Federal student loans taken out for graduate school, including federal Graduate PLUS loans, can qualify for forgiveness under the plan.
The Supreme Court, dominated 6-3 by conservatives, will have an ultimate say on whether Biden can wipe out student loan debt, fulfilling his campaign pledge in 2020. So far, Republican-appointed lower court judges have kept Biden’s plan from going into effect. It remains to be seen how the justices will rule, but their questions in the oral arguments on Tuesday will give insight into what they are thinking.
Debt forgiveness, if it goes ahead, is for borrowers holding federal student loans, not private loans. To determine what kind of loans you hold, log in to the Federal Student Aid website, studentaid.gov. Direct loans, including Parent Plus loans, qualify. Some older FFEL and Perkins loans are also eligible if owned by the Department of Education. For people holding older FFEL loans, consolidating those loans can lead to credit for forgiveness under specific income-driven repayment plans.
During the pandemic, two presidential administrations paused payments for those holding federal student loans. The pause has been extended to as late as this summer. Payments are set to resume, along with the accrual of interest, 60 days after the court cases are resolved. For example, if legal issues remain at the end of June, payments would restart at the end of August. If the court issues a ruling in March, repayment could restart as early as May or June. If the cases haven’t been resolved by June 30, payments will start 60 days later.
If Biden’s administration loses its court appeals, advocates point to other ways the debt might be forgiven, including through the Higher Education Act. However, Biden’s administration is not saying whether it is exploring other options for canceling the debt.
Get JD Journal in Your Mail
Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!
About 26 million people have already applied for debt forgiveness, and 16 million applications have been approved. If the Supreme Court approves the plan, nearly half of those people could have their federal student debt eliminated.
In conclusion, the Supreme Court’s decision on Biden’s student loan forgiveness plan will significantly impact millions of Americans struggling with student debt. While the outcome remains uncertain, borrowers should take the opportunity to understand their loan types and eligibility for forgiveness. It is also essential to remember that even if the plan is not approved, there may be other options for debt relief in the future. For now, borrowers should continue to monitor the situation closely and prepare for the possibility of loan payments resuming later this year.
REFERENCES:
Supreme Court student loan hearing: What you need to know
