Today, the U.S. Supreme Court ruled against President Biden's student loan forgiveness program, meaning borrowers must prepare to resume monthly payments.
What does it mean and what should you do? If you are directly impacted as a borrower, we hope you will find actionable information in the bullet points below. If you simply want to learn more about the decision, the following information provides a useful summary.
- Payments on federal student loans that were paused during the pandemic forbearance will be due starting in October, and interest resumes in September.
- Borrowers should visit the Federal Student Aid (FSA) website to find their loan servicer and payment amounts, update their contact information, and confirm auto-debit enrollment.
- Consider using the FSA's Loan Simulator tool to find a repayment plan that suits your financial needs, and applying for an income-driven repayment (IDR) plan.
- Borrowers in default should utilize the Fresh Start program to bring their loans to current status and stop collections and wage garnishments.
- Despite the Supreme Court ruling, some borrowers may receive debt relief through a one-time payment adjustment that counts certain months toward loan discharge under income-driven repayment plans.
- The one-time payment adjustment will be automatic for most borrowers, except for those in default or with commercially-held FFEL loans.
- Borrowers who have been in repayment for 20 or 25 years should see the adjustment by August 1, 2023, while others will see it in 2024.
- President Biden also announced plans to reform income-driven repayment plans, which may reduce monthly payments and provide loan forgiveness after 10 years of payments. Implementation of these changes is expected in 2024, but it could happen earlier if the Department of Education publishes a final rule.
As always, contact us with questions about your specific situation.