What Happened to Student Loan Forgiveness?

In July 2023, the Supreme Court ruled against the Biden-Harris one-time student loan forgiveness program. The Court didn’t oppose the idea of debt forgiveness. Instead, it found the Department of Education exceeded its authority by creating the program without Congressional approval. Borrowers were disappointed, but the Court’s decision isn’t the final word on student loan reform. In response to the ruling, the Biden administration declared it would seek new ways to lighten the burden of school debt. How does the Court’s decision and its immediate fallout affect you? This article covers three big takeaways from a summer of student loan chaos.

1. Repayment Starts in October

The federal student loan payment pause officially ended on Sept. 1, 2023. Borrowers are expected to make their first payment in October 2023. You can prepare by following our step-by-step guide How to Survive Student Loan Repayment in 2023. Take action as soon as possible to reduce your confusion and frustration.

2. Pre-Existing Loan Forgiveness Programs are Unaffected

The Supreme Court’s decision was widely reported as a ruling against student loan forgiveness. That’s inaccurate. The ruling singles out the one-time loan forgiveness program created by the Biden administration in 2022.

There are several loan forgiveness programs aimed at specific categories of borrowers. These include teachers, government workers and employees of certain non-profit organizations. Other programs target smaller groups of borrowers. Learn more about these programs on the Apply for Loan Forgiveness page.

3. A New Repayment Plan Offers Low Monthly Payments

In August 2023, the Biden administration announced the Saving on a Valuable Education (SAVE) Repayment Plan. SAVE is an income-driven repayment (IDR) plan that can have monthly payments as low as zero dollars. It also reduces the paperwork required by other IDR plans. The government intends to add more benefits to SAVE in 2024. SAVE is worth investigating if you need a lower monthly payment.

More Changes Ahead

It’s a confusing time to be a student loan borrower. The repayment system is being reshaped, and it’s a messy process. More changes are likely in both 2023 and 2024.

It’s important to stay up to date on relevant news while tuning out the noise. You can do that by registering for Federal Student Aid (FSA) email updates. You’ll need a StudentAid.gov account to sign up. Follow these instructions if you don’t have one.