Update Friday, 11: am:
The U.S. Supreme Court ruled on Friday that the Biden administration’s plan to eliminate some $400 billion in federal debt for student borrowers was an overreach of authority, a decision that blocks President Biden’s ability to deliver on one of his key campaign promises: student loan relief. The ruling was 6-3 along ideological lines, with conservative judges voting with the majority and the liberal judges dissenting. Biden’s plan would have provided up to $20,000 in loan relief for federal student borrowers who make under a certain amount of money.
The decision comes as a double blow for students whose loan payments are slated to begin again this fall for the first time since the pandemic. More on that below.
Original story:
Many Americans will see their monthly expenses shoot up this fall. That’s when the pause on federal student loan interest and payments will expire. The pause was implemented in 2020 as the pandemic and its negative economic effects swept across America. The hope was that by freezing federal student loan payments and interest, Americans would be on slightly better financial footing as economic uncertainty loomed.
But three years later, the pandemic feels like it’s in the rear-view mirror and the student loan payment pause is coming to an end. However, this year is also notable for a few more student loan reasons. First, 2023 will be the first time that many Gen Z who graduated college in 2020 and later will have to make federal student loan payments—a change that will be a shock to their wallets.
And second, this month the Supreme Court is set to rule on whether the Biden administration’s student loan relief package, which will forgive up to $20,000 in federal student loans for most borrowers, is lawful. If SCOTUS says it is, 14 million Americans are set to have the entirety of their student loans forgiven, reports CNBC.
Given all that’s happening on the student loan front in the months ahead, these are the dates you need to keep an eye on if you have federal student loan debt:
- June 20-30: Sometime during this period, the Supreme Court is set to announce its decision on the legality of the Biden administration’s federal student loan forgiveness plan. Depending on the decision, it’s a day that will either be welcomed by those with student loans or one met with disappointment. Though the decision can come any day, higher education expert Mark Kantrowitz told CNBC that SCOTUS has typically been releasing its rulings on a Thursday, which means June 22 or June 29 could be the likely date.
- September 1: This is the date that interest will begin accruing on federal student loans again. Since 2020, interest on federal student loan balances has been 0%. But from September 1, your usual interest rate will apply to your student loan balance, according to StudentAid.gov.
- October: This is the month that those with federal student loan debt will be required to start making payments again, according to StudentAid.gov.
It’s important to note that no matter what SCOTUS decides this June, those with remaining federal student loan debt will still need to commence payments this fall. That being said, as always, those who are struggling to repay their student loan debt can request a deferment or forbearance.
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