The Supreme Court is hearing arguments Tuesday in a pair of cases involving President Biden’s plan to cancel up to $20,000 of student loan debt for over 40 million Americans. Nearly half of these students could potentially have their federal student debt taken care of.
However, the decision won’t be made for months. The pause for those holding federal loans has been extended as late as summer.
The plan was announced by the Biden administration last August, stating that it would cancel $10,000 in federal student loan debt for those earning less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, typically coming from lower-income households, would receive an additional $10,000 in debt forgiveness, for a total of $20,000.
According to the White House, in less than a month, more than 26 million people applied with over 16 million of those applicants having been approved by the Department of Education.
If approved, the debt forgiveness goes to borrowers holding general student loans, not private loans. Federal student loans taken out for graduate school can qualify for forgiveness as well.
According to CBS News, the justices plan to review two arguments, today: whether the states and borrowers have the legal right to challenge the program, and whether the Biden administration exceeded its authority with its debt relief plan.
Betsy Mayotte, President of the Institute of Student Loan Advisors, encourages people not to make any loan payments until the pause has ended. Instead, she recommends putting the payment amount in a savings account.
“Then you’ve maintained the habit of making the payment, but earning a little bit of interest as well,” Mayotte suggests. “There’s no reason to send that money to the student loans until the last minute of the 0% interest rate.”
As of present, there is no other option for cancelling debt if this plan loses its court appeals. Students will need to pay up! This story is developing.
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