Here's What You Need To Know About Student Loans Since The Supreme Court Said No To Forgiveness

"Everyone is struggling right now, and this renewed payment will be the straw that breaks the camel’s back."

President Biden and more than 40 million Americans experienced a devastating setback regarding student loan debt relief.

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On June 30, 2023, the Supreme Court of the United States (SCOTUS) struck down the one-time student loan debt relief promised to borrowers under the Biden-Harris Administration’s Student Debt Relief Plan. 

The Biden-Harris Administration’s Student Debt Relief Plan Facts

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On August 23rd, 2022, President Biden released a three-step plan to relieve those experiencing the student loan debt crisis. Along with allowing borrowers a final extension that pushed loan repayments not to begin Sept. 1st, 2022, he also aimed to create new rules for income-based repayment plans and debt relief dependent on your income level and funding source for your education. 

Those who took out Pell Grants in addition to student loans would be eligible for up to $20,000 of debt relief. For non-Pell Grant recipients who took out student loans, you would qualify for debt relief of up to $10,000. Despite all requirements, up to 40 million student loan borrowers were eligible for debt relief under this plan. 

It’s About More Than Debt Relief.

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“Studies show that women still have a wage gap between them and their male counterparts that starts the minute they graduate,” explains Gloria Blackwell, CEO of the American Association of University Women (AAUW). “Employers expect you to negotiate. Despite learning how to, women are still not negotiating as much or as well as their male counterparts.” Even going into higher-paying fields and participating in negotiation classes, it’s still prevalent and is worse with women who are also POC. Research also shows that women carry more student loan debt than men, making the wage gap even more painful.

For example, women who identify as white statistically make .83 cents to every dollar white non-Hispanic men make — and Black women are paid less at .64 cents on the dollar while women who are Latinas earn .54 cents for every dollar a white man makes. 

As a Latina, this would mean you, on average, make $32,400 while your white male counterpart makes $60,000. If both are taxed at 15%, a monthly student loan payment of $300 would be 7% of the man’s take-home pay, while a Latina would be burdened with 13% of her take-home pay being taken for debt repayment. 

Dreams or Student Loan Payments?

The plan, if passed, would have benefited everyone. Many people have put off their dreams, such as homeownership and starting a family, simply because they can’t afford it. “The Supreme Court is showing that they don’t care about the current financial crisis many Americans are experiencing, especially those with marginalized backgrounds,” states Melissa Byrne, executive director of WeThe45Million. 

Bryne also agrees that this ruling will prevent people from closing the wealth gap with the inability to purchase a home which has often been proven as a way to raise someone’s wealth. With debt relief, these dreams could turn into an actual reality. Borrowers would also have more money to put into our economy, stimulating job growth. 

"Everyone is struggling right now, and this renewed payment will be the straw that breaks the camel’s back."

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Writer Doug Weissman and his wife would have been part of that 40 million that would have benefited from student loan forgiveness. Weissman and his partner needed higher education for career advancement in their respective fields. Because of the high monthly payments both of their loans require, a few of their goals had been placed on hold. The Department of Education’s COVID-19 student loan forbearance program changed that. 

Not only were they able to add their daughter to their family, but they were also able to purchase a home to accommodate their new addition. In an HCOL area, the pause meant they could catch up and provide for their daughter’s future, starting with preschool. With the pause ending on September 1st, 2023, Weissman is beginning to worry. He lost his previous job last year, and while he’s been able to cover his family with freelance writing, he’s still to this day looking. 

“Studies have shown that children who are enrolled in preschool tend to have fewer behavior problems than their peers, are more likely to have higher grades as well as ace their SATs and go on to college,” he explains. “We want her to have the best life possible, and our student loan payments will affect that. Our monthly payments are the same as her monthly tuition. How can we afford their mortgage, daycare, and regular living expenses like utilities and groceries while saving for their daughter’s future or an emergency?”

Do borrowers still have options?

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TL;DR of it, yes, if you are currently experiencing student loan debt, you have options under the rest of the Biden-Harris Administration’s Student Debt Relief Plan. According to Blackwell, all borrowers must start preparing to repay their student loans and know all available options. 

The first step is to find out who your loan servicer is. A loan servicer is a company that the US Department of Education assigns to collect your student loan payments. It’s also common to start with one servicer only to have your loan transferred to a different lender. This is why you must go to Studentaid.gov to find out who your current loan servicer is. You can find out who is collecting on your student loan by visiting your account dashboard created when you filled out your FAFSA application. 

You must also understand the terms and conditions used when discussing student loan debt, Blackwell expresses. A payment pause (which we’re currently experiencing) ends Sept. 1, 2023, meaning that your first payment will be due as early as Oct. 1st, 2023. If you cannot afford to pay your bill, call your servicer now to discuss payment options and what relief they can offer.

See if you are eligible for any repayment or forgiveness programs that are already available.

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Despite the student loan debt relief plan not being passed, relief is still available if you qualify through the U.S. Department of Education. Programs are available for educators who serve in the public service sector (PSLF). More programs are worth exploring on Studentaid.gov under the loan forgiveness tab. 

Income-driven repayment plans are another option if your monthly payment feels impossible compared to your take-home pay. These programs also offer debt forgiveness after 20–25 years, depending on which one you decide to choose. These plans include the REPAYE, PAYE, IBR, and ICR plans. 

Biden has also pledged to keep forward with the Save for a Valuable Education plan that was part of the original student debt relief announcement. Under SAVE, an income-driven repayment plan will be lowered from 10% to 5%. This plan aims to help those with room to breathe. It’s not student loan forgiveness, but that could lower a student loan payment that’s $300 to $150, meaning you’d pay $1,800 instead of $3,600 over a year alone. 

What if I can’t afford to make my loan payments?

You’re not alone. A recent study published by Cleo shares that 55% of current borrowers will need to take on a second job to afford their repayments. 61% of those surveyed said they know or are unsure if they can make payments. With these statistics, it’s not surprising that 46% say their mental health will be affected the most. 

The Biden Administration has initiated an “on-ramp” to repayment to provide relief. Starting Oct. 1st, 2023, through Sept. 30th, 2024, if you cannot make your payments, this will not be held against you. Your student loans will start collecting interest again, but you will not fall into delinquency, which protects your credit score or keeps you from being turned over to a debt collection agency.

There is still hope.

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As of this writing, the Biden-Harris Administration, along with the U.S. Department of Education, is working to push student loan forgiveness under the Higher Education Act. So, debt relief can still be in the cards for many of us carrying around debt that “promised” us a better-paying job. 

You can also take action to advocate for student loan forgiveness publicly. “Call Congress representatives to tell them they need to pass this bill,” Byrne stresses. You can also attend local demonstrations, participate in public forums, and vow to see it through for yourself and your loved ones. 

Are you carrying student debt? If so, what are your next moves? Let's talk about it in the comments.