After a multiyear hiatus in payments, federal student loan borrowers now face the daunting task of resuming payments to loan servicers.
The Supreme Court halted President Biden’s ambitious student loan balance forgiveness plan a month ago, impacting millions of borrowers who were hopeful of shedding a portion
Though the broad student loan balance forgiveness plan faced defeat, the Biden administration did manage to alleviate the burden for a select group of borrowers by wiping out $130 million in student loan debt. The beneficiaries of this student loan balance were approximately 7,400 borrowers who had attended CollegeAmerica in Colorado. This action was taken in response to the discovery of false claims made by the institution regarding the salaries and employment rates of its graduates, as well as deceptive information about academic offerings and private loan programs. CollegeAmerica subsequently ceased enrolling new students and closed all its campuses in 2021.
While this specific case led to successful forgiveness, the chances of widespread student loan balance forgiveness remain slim for now. Borrowers who experienced relief over the past three years must prepare for the resumption of student loan balance payments as a regular monthly expense.
Hope lingers for federal borrowers through the option of switching to an income-driven repayment plan
Under such plans, monthly loan payments are determined based on income percentage and come with the potential for eventual loan balance forgiveness.
In a positive move, President Biden introduced the SAVE repayment plan, aiming to reduce individual monthly student loan balance payments and offer some borrowers a debt-free status within ten years—a faster timeline compared to the current income-driven repayment plans.
Despite the challenges, the Biden administration appears committed to exploring ways to alleviate the burden of student loan balances wherever possible. Borrowers should keep an eye on further developments in this ongoing effort.
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