Student Debt Forgiveness Rejected But Useful Student Debt Relief Benefits Remain in Force

The Supreme Court ruled 6-3 against President Biden’s student debt relief program. 

In all of the news about the Supreme Court decision, elements of the debt relief program that were not struck down, but are still significant for borrowers, have been ignored. Here are some of the student debt provisions for which you may still be eligible.

• Student loan borrowers’ monthly minimum payments will be capped at 5% of “discretionary income,” down from 10%.
• The formula for calculating “discretionary income” was changed so that more borrowers will be eligible for the minimum payment. Under the new rules, “discretionary income” will be measured at 225% of the federal poverty line, up from 150%.
• Balances older than ten years will be forgiven, provided the original balance was $12,000 or less. This has been reduced from balances older than 20 years.
• The interest on student loans will resume accruing on September 1, 2023 and the first repayments will come due in October. Though interest will begin to accrue this September, the Department of Education will not send late or missed payment information to credit agencies for payments due until September 2024.

For more information on student debt relief, please contact your student loan servicer, studentaid.gov or call the Federal Student Aid Information Center at 800-433-3243.

July 2023