Student loan forgiveness update: What you need to know

Inlow Hall, where the student accounts and financial aid offices are located.

Students and alumni across the country have been anxiously waiting as the Supreme Court reviews the measure for student loan forgiveness. 

In August 2022, President Joe Biden announced his administration’s plan for student loan debt forgiveness, a key promise of his presidential campaign. The plan calls for up to $20,000 in forgiveness for borrowers who received Federal Pell Grants and have a yearly income of less than $125,000 per year for individuals or $250,000 per year for families. Biden’s plan also calls for $10,000 of loan forgiveness for all other borrowers, following the same income limits. 

In October 2022, implementation of the plan was blocked due to multiple lawsuits from Republican states and individuals. 

The Supreme Court agreed to hear two challenges: One led by six Republican-controlled states that claim granting the student loan forgiveness would negatively impact companies in their states that service federal student loans, and another involves two plaintiffs who argue that the policy has harmed them by partially or completely excluding them from loan forgiveness. 

The plaintiffs in both lawsuits argue that the Biden administration does not have the jurisdiction to eliminate student loan debt according to the program’s proposed regulations. However, the Biden administration believes that the Heroes Act of 2003 gives the executive branch the authority to relieve federal student loan debt during a national emergency, such as the COVID-19 pandemic. 

On Wednesday, the U.S. House of Representatives voted to pass a bill that would overturn President Biden’s student loan forgiveness plan, before the Supreme Court hearing takes place. The measure was brought forth under the Congressional Review Act, which gives Congress the right to suspend executive actions taken by the president. 

The bill will be sent to the Senate next, where it is unlikely to pass. If the bill is approved by the Senate, President Biden could veto it.

If passed, the bill would nullify the moratorium and federal student loan repayments would resume. Otherwise, the Supreme Court is set to rule on the student loan forgiveness plan on June 30. 

The student loan moratorium extension is scheduled to end 60 days after June 30 or upon the Supreme Court’s decision on the student debt program, whichever comes first. Federal student loan repayments would resume August 30 unless the Biden administration decides to extend the moratorium. 

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