President Joe Biden originally announced a plan to forgive up to $20,000 in student loans, and an estimated 45% of borrowers would have had their federal student debt wiped out completely. As many as 40 million Americans could benefit from the forgiveness initiative, which would forgive
On Thursday 11/10/22, a federal judge in Texas struck down President Biden’s student loan forgiveness program. After the federal judge ruled against Biden’s plan, financial advisers, including Williams & Schiller are recommending that borrowers prepare to make payments.
As a result of the ruling, the Department of Education has stopped accepting applications for debt relief, though the department said it was holding the applications that have already been submitted while the administration appeals the decision.
It could be a while before there’s any clarity on what will happen to those applications. Here’s what experts recommend doing in the meantime:
Know That Forgiveness May Not Happen
At this point, we don’t know if this forgiveness will take place, or when. It is best to be prepared financially for the forgiveness to not happen.
Prepare Your Budget
With required payments currently scheduled to resume in January, now is a good time to get your finances in order, and prepare to begin paying on your loans again. It’s possible the payment moratorium will continue but it’s best to be prepared.
Save Your Refund Checks
Some borrowers have already received refund checks for payments made during the pandemic pause, which they could apply for as part of a little-known provision of the Covid-19 stimulus program. Many did this under the assumption they would have at least $10,000 in student debt forgiven. Don’t know if you have this? Contact your loan servicer for more information.