Are Student Loans Being Forgiven or Not?

House Republicans are trying to repeal President Biden’s student loan forgiveness plan and the administration's latest efforts to extend the student loan payments pause. Any repeal won't pass the Democrat-led U.S. Senate, but the move comes as the U.S. Supreme Court is still considering the legality of Biden's plan. It also shows that House Republicans aren’t likely to support any form of student loan forgiveness — no matter what the U.S. Supreme Court decides. 

“President Biden’s so-called student loan forgiveness programs do not make the debt go away, but merely transfer the costs from student loan borrowers onto taxpayers to the tune of hundreds of billions of dollars,” said Congressman Bob Good (R-Va.). Good has been a vocal leader in the efforts to repeal Biden’s student loan forgiveness plan.

So, what does this back-and-forth mean for you? Have a plan to resume your student loan payments.

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What is the Status of Student Loan Forgiveness?

Republicans are currently trying to repeal Biden’s student loan forgiveness plan. The House will vote to block Biden's plan on Wednesday, and the repeal is expected to pass. The vote is largely symbolic because of the power split in Congress but the path to student loan forgiveness remains rocky because the Supreme Court hasn't yet ruled on whether the program is legal.

Republicans, who hold the House majority, largely oppose Biden’s plan, and some moderate Democrats may also not approve of the student loan debt relief plan. For example, Rep. Chris Pappas (D-Nh), has said that student loan debt should be addressed in a way that does not add to the national deficit. (In 2022, the Congressional Budget Office estimated Biden's student loan forgiveness plan would add $426 billion to the national deficit.)

When will the Supreme Court rule on student loan forgiveness? The Supreme Court is expected to rule on the legality of Biden's student loan forgiveness program before the end of June.

As of now, it doesn’t appear that President Biden has a backup plan for broad-scale student loan forgiveness if the Supreme Court rules against his original plan. However, the Biden administration has taken other measures to help borrowers with student loan forgiveness, through programs like borrower defense loan discharge.

But, even if the Supreme Court determines Biden’s plan is lawful, Republican lawmakers might still seek to block other approaches to forgiving student loan debt.

Are Student Loans Still Deferred? 

You don’t need to make payments on your federal student loans yet because the pause on federal student loan payments is still in place. But student loan payments could resume very soon. According to the Department of Education, as of now, federal student loan payments are set to resume 60 days after June 30 or about 60 days after the Supreme Court rules. So, what does this mean for you if you have a federal student loan?

• Student loan payments will resume around August 29th unless the pause on student loan payments is extended.
• Student loan payments could resume before August 29th if the Supreme Court rules Biden’s plan as unlawful. (For example, if the Supreme Court rules that student loan forgiveness is unlawful on June 15, student loan payments would resume August 14th.)

Is Student Loan Forgiveness Still Happening? 

As Kiplinger has previously reported, President Biden’s student loan forgiveness plan is on hold due to court challenges, but borrowers may still have a portion of their federal student loans forgiven. For example, an income-driven repayment plan allows you to make student loan payments based on your income and family size. Additionally, the Biden administration has recently changed various rules governing income-driven repayment so that more borrowers might benefit from the program.

• Under the income-driven plans, you would make student loan payments for 20-25 years, depending on the type of plan you enroll in. 
• Your student loan balance at the end of the 20-25 year term would be forgiven, regardless of the amount you still owe.

Other Options to Pay for Student Loans 

Borrowers have other student loan repayment plans to choose from if they don’t qualify for an income-driven repayment plan. How long it takes to pay off student loans depends on the type of plan in which you enroll. Some plans are designed so you’ll pay less interest, which saves you money in the long run. Other repayment plans are designed to make the repayments less of a burden while you are making monthly payments.

• Standard Repayment plan: You will make fixed payments for up to 10 years and will accrue less interest.
• Graduated Repayment plan: Your student loan payments will start low and will gradually increase as you begin to make more money.
• Extended Repayment Plan: You will make student loan payments for up to 25 years. Unlike the income-driven plans, your balance will need to be fully repaid at the end of the 25-year term. (subject to eligibility requirements)

Having a plan in place to repay your student loans before payments resume is a good thing to focus on if you have a federal student loan. Biden’s plan for student loan forgiveness might not happen right away — or possibly not at all. But having a strategy to make your monthly payment again and/or finding a federal student loan repayment program that works for you might help make monthly payments more manageable.