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I was never optimistic that the White House’s massive student loan forgiveness was going to happen.

Before applications could be accepted, opponents started attacking the president Biden’s repeal plan as much as $10,000 in college debt for individual borrowers earning less than $125,000 and less than $250,000 for couples filing a joint federal tax return. Pell Grant recipients could have Up to $20,000 was written off their loans.

Critics such as the Republican attorneys general of Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina have gone to court to challenge Biden’s legal authority to forgive more than $400 billion in student loans for more than 40 million borrowers.

Now the future of the program depends on the Supreme Court.

Supreme Court to review legality of Biden’s student loan forgiveness program

For those still paying for college, is there hope?

Given the conservative makeup of the court, I would be shocked if SCOTUS sided with the Biden administration. So what should you do until we know for sure?

A reader from Delaware emailed to ask for advice on behalf of a 2021 graduate. The graduate worked, lived at home and saved, hoping to pay off his student loans as soon as possible.

Let’s walk through the legal uncertainty surrounding federal loan termination and loan forgiveness.

What should borrowers do while loan forgiveness is in limbo?

Do what you can to take advantage of the latest credit freeze that started in March 2020.

The latter was due later this month. But due to legal challenges, the Department of Education extended the moratorium again, this time until the department is allowed to continue with the debt repayment program or the dispute is resolved. This is all tied to the June 30 deadline.

If the plan is not implemented and the lawsuit is not resolved, the loan payments will resume 60 days after the June deadline. It is a complicated way of saying. You may have until September of next year before you have to resume your loan payments.

Don’t expect another delay, though. Inflation is showing signs of easing, making it difficult for the administration to continue delaying the resumption of federal loan payments.

Start preparing for those payments now! It the time will come before you know it.

Student loan payment freeze extended as courts weigh debt settlement

Should savings be used to pay off student debt?

One of the biggest benefits of suspension payments has been zero the interest rate. This meant that any voluntary payments went directly towards reducing the principal.

For those who could afford it, especially for people who is the debt the above proposed forgiveness amounts; I advised them to continue making payments, in some cases well above the required minimum.

He paid off his student debt days before the aid was announced. He has no regrets.

Some people followed the advice to accumulate cash that would otherwise have gone toward payments.

“What I’ve been encouraging people to do is keep making those payments, but instead of sending them to the lender, deposit them into a high-yield savings account and then use that to earn a little bit of interest,” Mark Kantrowitz said. , financial aid expert and author of Who’s Graduating from College? Who doesn’t?” “It also puts you in a better position. If there’s an emergency, you can use it as an emergency fund, or you can use it to pay off higher-interest debt.”

Some borrowers may be too quick to respond to the promise of loan forgiveness.

As part of the pandemic-related pause, people who have sent voluntary payments can request the money back if they need or want to. After Biden announced the debt relief, student loan servicers were inundated with requests for refunds. The strategy was to get back at least up to the maximum loan forgiveness amount of $10,000 or $20,000 and then apply for debt repayment.

Borrowers bragged on social media platforms like Reddit about their successful repayments, which also meant their loan balances were reinstated. So I hope those people put that money aside, given that a lawsuit could derail the debt repayment plan.

Can Congress make a move next term? With Republicans in control of the House of Representatives and Democrats holding a slim majority in the Senate, it is unlikely that there will be legislation advancing Biden’s plan if the Supreme Court blocks it.

Student loan servicers have been inundated with refund requests following news of the forgiveness

Should you invest the money?

No, the risk is too great to lose. The stock market is volatile, mainly due to economic uncertainty, particularly the persistence of high inflation. There is no guarantee that you will have a return that exceeds the cost of interest.

In general, if you need the money in five years or less, experts say park it in a safe place. Check Bankrate or DepositAccounts for a list of federally insured institutions that pay the best deposit account rates.

Keep the cash that is meant to pay off debt in the limbo of a loan forgiveness program. Be prepared to pay off the debt before the end of the grace period to take advantage of the interest-free period.

Students, don’t expect loan debt forgiveness to ever happen again

Should I pay off debt that exceeds the recommended $10,000?

If your loan exceeds the maximum allowable amount under the Biden program, then yes, pay as much as you can while not being charged interest. The savings can be substantial.

Unlike other forms of debt, such as credit cards, federal direct loans are “daily interest” loans, the Department of Education explains to borrowers.

Most of your monthly payments may cover very little principal, depending on your interest rate and other factors.