Federal student loan borrowers have been in a state of flux ever since last summer, when President Joe Biden first announced his intention to forgive up to $20,000 in debt per borrower through a massive loan forgiveness plan. Legal challenges to the plan have kept it from being implemented, prompting the administration to extend the federal student loan pause until a resolution is reached.
Read: 6 Big Shakeups to Social Security in 2023
Check Out: 8 Places in California Where Home Prices Have Plummeted
A lot more should be known toward the end of February, when the U.S. Supreme Court finally hears arguments about the forgiveness plan. The hearing is scheduled for Feb. 28 and will focus on two lawsuits challenging the legality of Biden’s plan.
While administration officials and others hold out hope that the SCOTUS will rule in favor of the plan, many observers doubt that will happen. The court’s conservative majority has already struck down other administrative emergency measures, Forbes reported.
If the student loan forgiveness plan is killed, then the 40 million borrowers who would benefit from it will have to wait even longer to see how things shake out.
The most immediate action Biden might take is to extend the student loan pause yet again, which would mark the eighth time it has been extended since it first went into effect in March 2020. The most recent extension is set to expire 60 days after either June 30 or whenever the Supreme Court decides on the loan forgiveness plan.
But as Forbes pointed out, extending the pause again could be tricky because all previous extensions were issued under emergency authority granted during the COVID-19 pandemic. The White House announced it would be ending the COVID-19 national emergency declaration on May 11, 2023, which could also end its authority to keep extending loan repayment pauses.
Live Richer Podcast: How To Get Rid of Your Student Loan Debt
Another possibility is that Biden will turn his focus to other loan forgiveness options such as income-driven repayment plans (IDRs). In January, the administration proposed new regulations to reduce federal student loan payments — especially for lower income and middle-income borrowers.
One proposal, the Revised Pay As You Earn (REPAYE) plan, offers $0 monthly payments for individual borrowers making less than about $30,600 a year, or borrowers in a family of four earning less than roughly $62,400. The U.S. Department of Education called it “the most affordable income-driven repayment plan that has ever been made available to student loan borrowers.”
But these types of plans could also come under further legal scrutiny if the loan forgiveness plan is struck down, according to Michael Brickman, adjunct fellow at the American Enterprise Institute. He told The Hechinger Report that such plans “have a limited authority granted by Congress” and could face more challenges in the future.
Biden might also decide to reissue the loan forgiveness plan under a different legal authority. As Forbes noted, borrower advocates and some student loan legal scholars have encouraged the administration to restart the program under a provision of the Higher Education Act (HEA), which also governs the federal student loan system.
The HEA gives broad authority to the Secretary of Education to “compromise, waive, or release any right, title, claim, lien, or demand” associated with federal student loans. One advantage of this option is that its legal authority doesn’t rely on a national emergency such as a pandemic.
Finally, the Biden administration could simply decide to scrap any further loan forgiveness plans and instead put its energy into bolstering other options such as IDRs and Public Service Loan Forgiveness (PSLF). But giving up on loan forgiveness altogether might have negative political consequences for the president.
″[Biden] will be launching his 2024 reelection campaign as America’s debt collector,” Astra Taylor, co-founder of the Debt Collective, told CNBC. Like Forbes mentioned, Taylor said Biden might instead decide to use a different law to justify his plan, such as the HEA.
More From GOBankingRates
10 US Real Estate Markets To Avoid for Now
Financial Insight in Your Inbox: Sign Up for GBR’s Daily Newsletter
Maximize your savings with these 3 expert tips
Take Our Poll: How Do You File Your Taxes?
This article originally appeared on GOBankingRates.com: If Biden’s Student Loan Forgiveness Plan Is Killed, What’s Next for Borrowers?
If loan forgiveness survives the Supreme Court, it will be the latest effort in a long line of policies that didn't fix the college-cost crisis, Betsy Mayotte writes.
BJ's Wholesale Club's (BJ) fourth-quarter results reflect growth in digitally-enabled sales. The metric surges 22% during the quarter.
The expected resumption of student-debt payments comes as borrowers in their 20s and 30s are falling behind on other obligations.
Turmoil at a small Florida college reveals how Ron DeSantis might wage war on bigger institutions if he ever becomes president.
The Department of Education seeks to limit risky behavior of for-profit colleges.
SVB Financial faced a perfect storm, but there are plenty of other banks that would face big losses if they were forced to dump securities to raise cash.
Silicon Valley Bank had boasted of having relationships with more than half of the venture-backed companies in the U.S.
“I've never seen a balance sheet crumble this quickly,” says Dale Wettlaufer, a partner at Bleecker Street Research who shorted the stock in January.
Mark Cuban raised questions about how regulators had allowed Silicon Valley Bank to end up in such a vulnerable position, and demanded that the Federal Reserve take immediate action.
Tesla's CEO says he's open to the idea of Twitter acquiring the Californian bank that was shut down on March 10 by regulators.
The halt of trading shares of Silicon Valley Bank is setting off a cascade of selling throughout the financial sector.
Depositors can't get their money out. Payrolls might not be met next weekend. And small companies, especially in the fast growing technology industries, might soon face closure as their assets are frozen. There will be a lot of nervousness when the financial markets open on Monday morning following the collapse of the Silicon Valley Bank in the United States and the decision by the Bank of England to take control of its London arm.
Bill Gates looks for income, too. This is how he gets it.
Sentiment shifts periodically on Wall Street, and you could argue Cathie Wood might be the prime example of fortune reversal. Once an investor favorite and hailed as a pioneer with a portfolio jam-packed with the novel and cutting-edge, Wood’s reputation has been tarnished over the past year and a half as her growth-oriented investing style went out of fashion in the post-pandemic climate. Does that mean Wood is ready to desert her strategy of backing innovative yet risky and often unprofitable
(Bloomberg) — The worst two-day stretch since 2016 for Charles Schwab Corp. looks like a case of bad timing for the buyers behind a large block trade in the brokerage.Most Read from BloombergStartup Bank Had a Startup Bank RunFrom Santa Clara to Shoreditch, SVB Fallout Spreads Around WorldSVB’s 44-Hour Collapse Was Rooted in Treasury Bets During PandemicSVB’s Auction Block Includes VC-Focused Lender, Wealth UnitSilicon Valley Bank Swiftly Collapses After Tech Startups FleeSchwab is down 17% sin
The crisis at two California banks sparked a CNBC discussion on cryptocurrency and technology in banking trends.
This is an announcement that Ford could have done without. The automaker said in early March that it would resume production of its much-watched F-150 Lightning pickup truck, the electric version of the iconic F-150. On Feb. 4, during a standard quality check, one of the F-150 Lightning in a holding lot displayed a battery issue and caught fire while the vehicle was charging.
The JPMorgan Equity Premium Income Fund (NYSEARCA:JEPI) has become a hit in the ETF world thanks to its 12.2% dividend yield and its monthly payout. While many investors are likely familiar with JEPI thanks to the considerable level of fanfare it has garnered as it has grown to $21.8 billion in assets under management (AUM), they may not be as familiar with JEPI’s newer and somewhat less heralded cousin — the JPMorgan Nasdaq Premium Income ETF (NASDAQ:JEPQ). There are some notable differences be
Miguel Abreu, a ride-hailing driver, bought a Chevy Tahoe for about $80,000 last summer. Then, in early December, Uber Technologies Inc. deactivated his account. Abreu, of Lynn, Mass., told MarketWatch the company kicked him off the Uber (UBER) app permanently because it suspected he was splitting his account, meaning two people were driving for one account.
The S&P 500 broke decisively below key levels. Here's what to do now. It's a big weekend for SVB Financial. Watch JPMorgan and these bank stocks.