By Katelyn Washington
House Republicans voted to repeal President Biden’s student loan forgiveness plan and the administration’s efforts to extend the student loan payments pause. However, that extension won’t happen anyway. President Biden agreed to resume student loan payments as part of the debt ceiling deal, which suspends the national debt limit until 2025.
“No one got everything they wanted, but the American people got what they needed. We averted an economic crisis, an economic collapse,” President Biden said in a speech regarding the debt limit agreement.
The U.S. Supreme Court struck down Biden’s student loan forgiveness plan. Consequently, Biden’s plan for widespread student loan relief won’t occur.
What Does This Mean for You?
Have a plan to resume your student loan payments. It’s prudent to stay informed about your options moving forward.
Status of Student Loan Forgiveness
The repeal of Biden’s student loan forgiveness passed both the House and Senate. This vote was largely symbolic because of the power split in Congress.
Republicans, who hold the House majority, largely oppose Biden’s plan, while some moderate Democrats also disapprove of the student loan debt relief initiative. For example, U.S. Sen. Joe Manchin (D-WV) voted to repeal Biden’s plan.
When will the Supreme Court rule on student loan forgiveness? The Supreme Court ruled on June 30. Biden’s student loan forgiveness plan will not move forward now that the Supreme Court has ruled against it.
As of now, it seems President Biden does not have a backup plan for broad-scale student loan forgiveness. However, the Biden administration has introduced other measures to assist borrowers through programs such as borrower defense loan discharge.
Will Student Loan Payments Resume?
You don’t need to make payments on your federal student loans yet, as the pause on federal student loan payments remains in effect. However, student loan payments are set to resume in October. Initially, payments were expected to start in August.
Is Student Loan Forgiveness Still an Option?
Biden’s original student loan forgiveness plan is no longer viable. Nevertheless, borrowers may still have a portion of their federal student loans forgiven. An income-driven repayment plan allows students to make payments based on their income and family size. Moreover, the Biden administration has recently modified various rules governing income-driven repayment to ensure more borrowers can benefit from the program.
- Under income-driven plans, borrowers will make payments for 20-25 years, depending on their chosen plan.
- Any remaining balance at the end of the repayment term may be forgiven, regardless of the amount owed.
How to Pay for Student Loans
Borrowers have various student loan repayment options to choose from if they do not qualify for an income-driven repayment plan. The duration it takes to pay off student loans will depend on the chosen repayment plan. Some plans are designed to reduce the total interest paid, offering substantial savings in the long term.
- Standard Repayment Plan: Fixed payments for up to 10 years, generally leading to lower interest.
- Graduated Repayment Plan: Payments begin low and gradually increase as the borrower’s income rises.
- Extended Repayment Plan: Payments are spread over up to 25 years. Unlike income-driven plans, borrowed amounts need full repayment by the end of the term (subject to eligibility).
Creating a repayment strategy before payments resume is crucial for managing federal student loans. While Biden’s student loan forgiveness plan has been struck down, devising a plan to make monthly payments or finding a suitable federal repayment program can significantly ease repayment burdens.
Former Tax Writer
Katelyn has over six years of experience in tax and finance. While she specialized in tax content, she has also contributed to digital publications on insurance, retirement, and financial planning. Katelyn believes that knowledge is the key to success and enjoys providing informative content to empower others.
