As you may have seen, the Supreme Court just struck down the long-awaited Biden-Harris Student Loan Forgiveness plan. This would have allowed eligible borrowers to cancel up to $20,000 in debt. Since 43 million Americans would have been eligible, the price tag would be around $400 billion!
The loan plan was a pandemic-related initiative that failed at the Supreme Court. As you can imagine, the White House is pursuing other paths for student loan forgiveness, so it is anyone’s guess if there will be any student debt cancellation. You can continue to check for updates on the Federal Student Aid website.
Next, Congress recently passed a new law which stops the extension of the Student Loan payment “pause.” Many student loan borrowers have not had to pay student loans since 2020, but that should be coming to an end soon. If you have student loans, the interest will resume on September 1st, and payments will be due October 1, 2023.
If you have student loans and have had that payment paused, I highly encourage you to begin planning NOW!
Here are my best tips for making this a smooth transition:
- Start Early
If possible, begin budgeting for your student loan payment as early as August so that your budget reflects your true expenses. - Set Up Automatic Payments
Once it is a certainty that you will need to begin making payments again (with Washington, you never know!) then set up a plan to make automatic payments. In addition to taking this off your plate each month, it can provide access to lower interest rates! - Communicate
If you have fallen on hard times, and you are not sure how you could possibly make those payments, please contact your student loan provider to see what options are available. In these situations, it is MUCH better to over communicate than to avoid the situation.
So we may not know exactly what will happen, but we can certainly prepare to begin paying again. I am not sure about you, but I don’t enjoy financial “surprises” so I hope this message helps you to not be surprised. If you need anything at all, please feel free to reach out. Simply set up a call through my calendar.
