NEW YORK — The Supreme Court met Tuesday to hear two cases challenging President Joe Biden’s student loan forgiveness plan. At stake: forgiveness of up to $20,000 in debt for more than 40 million Americans. Nearly half of those people could have their federal student debt wiped out entirely.
Already, about 26 million people have applied for debt forgiveness, and 16 million applications have been approved. However, because of court rulings, all the relief is on hold. The Education Department stopped taking applications in November because of legal challenges to the plan.
The Supreme Court will have the ultimate say on whether Biden can wipe out student loan debt, fulfilling a campaign pledge he made in 2020. Here’s what to know if you’re waiting for debt relief.
1. Who qualifies for Biden’s student loan forgiveness?
The plan Biden announced last August would cancel $10,000 in federal student loan debt for those earning less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically come from lower-income households, would receive an additional $10,000 in debt forgiveness, for a total of $20,000.
Federal student loans taken out for both undergraduate and graduate school, including Graduate PLUS loans, can qualify for forgiveness under the plan.
Borrowers qualify if their federal student loans were disbursed before July 1.
2. How and when is the Supreme Court expected to rule on student loans?
The Supreme Court is dominated 6-3 by conservatives, and those justices’ questions in oral arguments Tuesday showed skepticism about the legality of Biden’s student loans plan.
Several conservative justices suggested the administration had exceeded its authority with the program. Chief Justice John Roberts mentioned the program’s cost — an estimated $400 billion over 30 years — and its wide impact on millions of Americans. Most observers, he said, would think “that’s something for Congress to act on.”
Conservative Justice Brett Kavanaugh pointed out Congress had declined to pass student loan relief, so Biden did it himself. That, he said, “seems problematic.”
We won’t know for sure how the court is going to rule until the decision is announced.
There won’t be a decision for months. The court usually issues all of its decisions by the end of June.
3. How do I know if my student loans will be forgiven?
Debt forgiveness, if it goes ahead, is for borrowers holding federal student loans, not private loans.
To determine what kind of loans you hold, log in to the Federal Student Aid website, studentaid.gov. Direct loans, including Parent Plus loans, qualify. Some older FFEL and Perkins loans are also eligible, if owned by the Department of Education. For people holding older FFEL loans, consolidating those loans can lead to credit for forgiveness under certain income-driven repayment plans.
If you’ve already applied and been approved, you should have received an email telling you this.
4. Will the pause in student loan payments continue?
During the pandemic, two presidential administrations paused payments for those holding federal student loans. The pause has been extended to as late as this summer.
Payments are set to resume, along with the accrual of interest, 60 days after the court cases are resolved. For example, if legal issues remain at the end of June, payments would restart at the end of August. If the court issues a ruling in March, repayment could restart as early as May or June.
If the cases haven’t been resolved by June 30, payments will start 60 days after that.
5. Is it possible student loan forgiveness won’t happen at all?
Yes.
Biden’s administration is not saying whether it is exploring other options for canceling debt if it loses its court appeals. But advocates point to other ways the debt might be forgiven, including through the Higher Education Act.
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