Supreme Court Shuts Down Student Loan Forgiveness. Now What?

July 12, 2023

We have some important updates about student loans in the United States. Recent decisions from the Supreme Court and Congress have brought changes to student loan forgiveness (which is now cancelled) and the payment pause (which is ending in October). Let's dive into the details: 

Loan Cancellation Blocked

Last year, President Biden signed an executive order aiming to cancel up to $20,000 in federal student loan debt for some borrowers. However, the order faced legal scrutiny and was eventually struck down by the U.S. Supreme Court on June 30, 2023.

The Court ruled that the Biden administration had exceeded its authority, emphasizing the need for clear congressional approval for mass debt cancellation. This decision affects nearly 26 million borrowers who had applied for loan forgiveness under the plan.

For those people waiting to see if some or all of their student loan would be forgiven, it's time to start preparing to make payments again in the near future. Keep reading to find out how.

When Will Payments Resume?

Alongside the Supreme Court ruling, Congress has also set an expiration date for the pause on student loan payments that has been in place since March 2020. Now, after nearly 3½ years of not having to make payments, borrowers will have to start again in October 2023.

The payment moratorium was originally put in place to help borrowers during the COVID-19 pandemic. Around 30 million people deferred their federal loans during the pause, according to the Education Department, while only about 300,000 continued making payments. As the moratorium comes to an end, people with student debt will need to prepare for the reality of regular loan repayments.

What Can Borrowers Do?

Picking up monthly student loan payments after such a long period is likely to be a significant change for borrowers.  Here are a few things they can do to prepare:

• Review their repayment options: There are a variety of repayment options available to borrowers, including income-driven repayment plans and Public Service Loan Forgiveness. Borrowers should review their options to find the one that best suits their needs.
• Start making payments early: If borrowers are able to start making payments before the October 2023 date, they will save some money on interest.
• Contact their loan servicer: Borrowers should contact their loan servicer to get more information about the changes to their loans. Need help finding your servicer? Visit StudentAid.gov to learn more.
• Beware of scammers: Never pay money to an outside company for help with your federal student loans. Your loan servicer will help you for FREE. Read our blog on student loan forgiveness scams to learn more.