Student loan forgiveness news is a hot topic in the United States, especially since President Joe Biden announced his plan to cancel up to $20,000 in student debt. This will benefit tens of millions of borrowers. However, the fate of his plan lies with the Supreme Court, which is expected to rule on its legality soon. Here are some of the latest news and updates on student loan forgiveness that you need to know.
Biden’s Student Loan Forgiveness Plan Suffers Blow
Student loan forgiveness news, which he unveiled in June 2022, would provide up to $20,000 in one-time debt relief for borrowers. This helps government-held federal student loans and earned income under $125,000 (or $250,000 if married and filing a joint tax return) in either 2020 or 2021. The plan’s cost is about $400 billion and benefits about 45 million borrowers.
However, the plan faced legal challenges from two groups of plaintiffs: six Republican-led states and a coalition of student loan servicers and lenders. They argued that Biden’s plan was unconstitutional and exceeded his executive authority. They also claimed that the plan violated the contract rights of the lenders and servicers, and harmed the states by reducing their tax revenues and increasing their costs.
In September 2022, two federal courts issued preliminary injunctions that halted the implementation of Biden’s plan, pending a final ruling. The Biden administration appealed those decisions, which ultimately reached the Supreme Court. The justices heard oral arguments in February 2023 and there are expectations to issue their decision by early July 2023, before their term ends for summer recess.
Supreme Court Decision On Student Loan Forgiveness News
The Supreme Court decision on Biden’s student loan forgiveness plan could have major implications for millions of borrowers, as well as for the future of student debt policy in the country.
If the justices uphold Biden’s plan, it would be a historic victory for student loan advocates. Also a huge relief for borrowers who are struggling with debt amid the Covid-19 pandemic and its economic fallout. It would also set a precedent for future presidents to use their executive power to cancel student debt without congressional approval.
However, if the justices strike down Biden’s plan, it would be a devastating blow for borrowers who were hoping for debt relief and a setback for student loan reform efforts. It would also raise questions about the legality of other student loans relief programs, such as income-driven repayment plans, public service loan forgiveness, and borrower defense to repayment.
It could also prompt Congress to take action on student loan legislation, such as passing a bill to cancel a smaller amount of debt or making student loan forgiveness tax-free.
Student Loan Payments Expected to Resume Soon
Regardless of the outcome of the Supreme Court case, most federal student loan borrowers can expect to resume their payments soon. This is the latest advancement in Student loan forgiveness news. The Covid-19 relief law that Biden signed in March 2021 extended the pause on federal student loan payments, interest, and collections until September 30, 2021.
However, Biden has not indicated any plans to extend the pause further, despite pressure from some lawmakers and advocates.
This means that starting October 1, 2021, borrowers will have to resume making their monthly payments on their federal student loans, unless they qualify for deferment or forbearance. Borrowers should prepare for this transition by contacting their servicers, updating their contact information, reviewing their repayment options, and budgeting accordingly.
Borrowers who are facing financial hardship or have lost their income due to Covid-19 may be eligible for income-driven repayment plans. This can lower their monthly payments based on their income and family size.
How can I check if I qualify for Biden’s student loan forgiveness plan?
You can check if you qualify for Biden’s student loan forgiveness plan by visiting the Education Department’s website. You also need to keep an eye out for Student loan forgiveness news. Also, you will need to provide your personal information, such as your name, Social Security number, and date of birth, as well as your income information for either 2020 or 2021. You will also need to confirm that you have government-held federal student loans and that you are not in default on them.
How can I apply for Biden’s student loan forgiveness plan?
You do not need to apply for Biden’s student loan forgiveness plan. If you qualify for the plan, the Education Department will automatically cancel up to $20,000 of your eligible federal student loans. You will receive a notice from your servicer informing you of the amount of debt that has been forgiven and the remaining balance, if any.
You will also receive a 1099-C form from the IRS, which will report the amount of debt that has been forgiven as income. However, you will not have to pay taxes on the forgiven amount, as it is excluded from taxable income until at least 2025.
What if I don’t qualify for Biden’s student loan forgiveness plan?
If you don’t qualify for Biden’s student loan forgiveness plan, you may still be eligible for other student loan relief programs, depending on your situation. So always try to stay updated with Student loan forgiveness news. For example, you may qualify for income-driven repayment plans, which can reduce your monthly payments based on your income and family size.
You may also qualify for public service loan forgiveness, which can forgive the remaining balance of your federal student loans after 10 years of qualifying payments and employment in the public or nonprofit sector. You may also qualify for borrower defense to repayment, which can discharge your federal student loans if you were defrauded by your school.
Student loan forgiveness news is a complex and controversial issue that affects millions of Americans. President Joe Biden’s plan to cancel up to $20,000 in student debt for eligible borrowers is facing a legal challenge that could determine its fate. The Supreme Court may rule on the case soon, which could have huge implications for borrowers and student debt policy.
Meanwhile, most federal student loan borrowers are to receive their payments soon, after a pause that lasted more than three years due to the Covid-19 pandemic. Borrowers should stay informed and prepared for these changes, and explore their options for student loan relief if they need it.