The Supreme Court on Friday ruled against President Joe Biden's student loan forgiveness plan, prohibiting up to $20,000 in loan relief per borrower from proceeding.
In a 6-3 decision, the justices found that Biden did not have authority to cancel $430 billion in student debt under the Higher Education Relief Opportunities for Students Act of 2003. Justices Sonia Sotomayor, Ketanji Brown Jackson and Elena Kagan dissented from the majority opinion.
The plan, first announced in August 2022, would have forgiven $10,000 for all federal student loan borrowers and $20,000 for Pell Grant recipients who earn less than $125,000 a year ($250,000 for married couples). Around 26 million borrowers already applied for relief and 16 million were approved, the Department of Education announced last fall.
While borrowers may have been hopeful to see their debt balances reduced, or even wiped out, there are existing student relief programs that can reduce or even forgive your student loans. The Biden administration has recently beefed up existing programs, making it easier to qualify for student loan relief.
Here's what borrowers can expect.
Payments will resume in October
Loan interest will resume accruing on Sept. 1, with payments due in October.
Payments and interest have been paused since March 2020, with the end originally contingent upon the date of the Supreme Court's ruling. However, the debt ceiling bill passed earlier this month included a provision to end the pause by August 30.
ED insists it is working with servicers to ensure borrowers have a smooth transition back into repayment, but has also warned of customer service delays and possible outages due to reduced funding for the Federal Student Aid office.
Other routes to forgiveness are still available
While you won't see your debt eliminated overnight, there are still other options available to borrowers for loan forgiveness.
Public Service Loan Forgiveness (PSLF) has become easier for federal borrowers to obtain under the Biden administration. The program forgives the remaining balances for a variety of public service workers — including government and non-profit employees, teachers, nurses and more — after 10 years of qualifying employment and monthly payments.
Teachers, specifically, may be eligible for Teacher Loan Forgiveness, which forgives up to $17,500 in federal loans for educators who teach at schools serving low-income students for five consecutive years.
All federal borrowers, regardless of occupation, are eligible to receive loan forgiveness through income-driven repayment (IDR) plans, which set borrowers' monthly payments at a percentage of their discretionary income, from 10% to 20%. Borrowers who make payments on one of these plans for 20 years (25 years for graduate borrowers) can have any remaining balances forgiven.
The Biden administration previously announced changes to the Revised Pay As You Earn (REPAYE) IDR plan that would reduce the percentage of discretionary income borrowers are expected to pay each month and shorten the length of time some borrowers would need to make payments before qualifying for forgiveness. The changes are expected to roll out next year, but borrowers can enroll in the current iteration of the program now.
Some or all of your student loans could also be discharged if the school you attended is found to have misled you or engaged in illegal practices. If you think your institution qualifies, you can apply for borrower defense to loan repayment and have your debt reduced or eliminated if approved.
How to keep your payments paused
Federal student loan borrowers who are unable to make their regular monthly payment should contact their loan servicer as soon as possible to explore options before missing payments.
Borrowers on IDR plans may be eligible to have their monthly payment reduced to $0 if their income is low enough. Plus, qualifying borrowers still make progress toward loan forgiveness and keep their loans in good standing since $0 monthly payments count toward the number of payments needed to receive forgiveness.
Those experiencing financial hardships like unemployment or serious medical issues may qualify for loan forbearance or deferment.
Deferments are available for a number of specific scenarios, such as undergoing cancer treatment or serving on active duty in the military, and can be granted for three to five years, depending on the situation. Interest accrues on unsubsidized loans during a deferment period.
A general loan forbearance can pause your payments for up to a year at a time, but interest continues to accrue on your loans. Your loan servicer will need to approve most deferments or forbearances, but some situations can grant you a "mandatory forbearance," including serving in an AmeriCorps position or the National Guard.
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