Supreme Court Blocks Biden's Student Loan Forgiveness: What's Next for Borrowers?

What was Biden's Student Debt Relief Plan?

The Biden-Harris Administration was looking to help federal student loan borrowers with a three-part plan, including up to $20,000 in loan forgiveness. Here is where they were trying to help:

• Three-part plan: The U.S. Department of Education is helping borrowers transition back to regular payments as pandemic-related support expires.

• Extended repayment pause: No one with a federally held loan has had to pay since President Biden took office, thanks to multiple extensions.

• One-time student debt relief: The plan addresses pandemic-related financial challenges and supports those at the highest risk of delinquency or default.

• Payment pause expiration: Interest will resume on Sept. 1, 2023, and payments will be due starting in October. Borrowers will be notified well before payments restart.

• Debt relief amounts: Pell Grant recipients can receive up to $20,000 in debt relief, while non-Pell Grant recipients can receive up to $10,000, based on income.

• Public Service Loan Forgiveness (PSLF): Borrowers employed by nonprofits, the military, or government may be eligible for complete student loan forgiveness.

• New income-driven repayment plan: The Biden-Harris Administration proposes a rule to create a new income-driven repayment plan, reducing future monthly payments for lower- and middle-income borrowers.

When will student loan payments resume?

Without the forgiveness plan in place, borrowers should continue making their student loan payments as scheduled. The student loan payment pause is set to expire August 29th 2023, meaning payments will be due by October, some as early as September. It's essential to stay informed about any changes in federal student loan policies that may impact your repayment plans. Keep an eye on news updates and communications from your loan servicer to ensure you remain on track with your payments.

Should I Refinance Now That the Forgiveness Did Not Pass the Supreme Court?

Refinancing your student loans may be a viable option now that the forgiveness plan has been blocked. Refinancing can potentially lower your interest rate, reduce your monthly payments, and save you money over the life of your loan. However, it's important to consider the trade-offs, such as losing access to federal loan protections and income-driven repayment plans.

Before making a decision, carefully evaluate your current loan balance, interest rates, and repayment terms. Compare offers from various lenders to find the best refinancing option for your needs. Additionally, consider consulting a financial advisor to ensure you're making the most informed decision for your financial future.

What happens if I don't pay my student loans?

Not paying your student loans can have severe consequences. If you fail to make payments, you may incur late fees, which increase your overall debt. Additionally, missed payments can damage your credit score, making it difficult to obtain future loans, credit cards, or even rent an apartment.

In some cases, the federal government may take legal action against borrowers who default on their loans, potentially resulting in wage garnishment or seizure of tax refunds. To avoid these consequences, it's essential to address any difficulties you may have in making payments as soon as possible.

If you're struggling to make payments, contact your loan servicer to discuss your options. They may be able to help you explore income-driven repayment plans, deferment, or forbearance, which can temporarily reduce or pause your payments.

What about Employer Student Loan Repayment Programs?

Employer-sponsored student loan repayment programs, like Paidly, offer significant benefits to borrowers looking to pay off their loans faster. These programs allow employers to make tax-free supplemental payments of up to $5,250 per year toward an employee's student loans. This additional support can help borrowers reduce their debt more quickly and alleviate some of the financial stress associated with student loans.

Many companies have recognized the value of offering student loan repayment programs as part of their benefits package. By helping employees tackle their student debt, companies can improve employee retention, satisfaction, and overall well-being. As the student loan crisis continues to impact millions of Americans, employer-sponsored repayment programs may become an increasingly popular solution for both employees and employers.

You should reach out to your HR or Benefits department and see if they are able to offer such a benefit. Here are some additional resources to help you ask for your employer.

• How to Ask Your Employer for a Student Loan Repayment Benefit: A Step-by-Step Guide
• How to start a student loan repayment benefit
• Top 5 Reasons Why Employers Should Offer Employee Student Loan Repayment

You got this

Asking your employer for a student loan repayment benefit might seem like a tall order, but it's not impossible. You just need to know where to start and how best to communicate with HR or your benefits administrator. The most important thing is that you have a plan in place before making any contact with your company!