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Will Biden’s One-Time Student Loan Forgiveness Happen?

Will Biden’s One-Time Student Loan Forgiveness Happen?
Sulaiman Abdur-Rahman
Sulaiman Abdur-RahmanUpdated July 4, 2023
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President Biden’s one-time student loan forgiveness program will not happen. The U.S. Supreme Court in a 6–3 ruling blocked the administration’s debt relief plan from moving forward. Handing down its decision on June 30, 2023, the Supreme Court found the president needs congressional authorization to cancel $430 billion of federal student debt.The Biden administration planned to forgive up to $20K of an eligible borrower’s student debt, but it won’t come into effect because of the high court ruling. Meanwhile, a new federal law requires the federal student loan payment pause to end Aug. 30, 2023. As a result, interest accrual on federal student loans will resume on Sept. 1, and payments will be due starting in October. 

Why Did the Supreme Court Block Biden’s Forgiveness Plan?

The Biden administration’s one-time debt relief plan relied on its interpretation of a 2003 federal law known as the HEROES Act as it relates to the Covid-19 pandemic. The administration argued the pandemic gave the Secretary of Education the national emergency power to enact broad student loan forgiveness under the Higher Education Relief Opportunities for Students Act.The HEROES Act includes a provision that says the U.S. Secretary of Education — an appointee of the president — “may waive or modify any statutory or regulatory provision” of federal student loan programs if the secretary deems it “necessary in connection with a war or other military operation or national emergency.”Multiple plaintiffs, including the states of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina, have filed federal lawsuits alleging Biden’s one-time forgiveness plan is unlawful and not authorized by Congress.The Supreme Court found the states had standing to sue and found the HEROES Act does not give the administration broad authority to cancel $430 billion of federal student debt.

When Will Federal Student Loan Payments Resume?

Federal student loan payments have been suspended since the Covid-19 pandemic began in March 2020, but the pause is scheduled to end effective Aug. 30, 2023. That’s because of a provision in the Fiscal Responsibility Act of 2023, which Biden signed into law on June 3.As mentioned earlier, interest accrual on federal student loans will resume on Sept. 1, 2023, and payments will be due starting in October.

Who Challenged Biden’s Student Loan Forgiveness Plan?

The main challenges against Biden’s student loan forgiveness plan came from six states and two additional plaintiffs as outlined below:

Myra Brown and Alexander Taylor vs U.S. Department of Education et al.

According to their lawsuit, plaintiff Myra Brown did not qualify for debt forgiveness under Biden’s one-time debt relief plan because her loans are commercially held, and plaintiff Alexander Taylor did not qualify for the maximum $20K in debt relief because he did not receive a Pell Grant.Biden’s program would have provided up to $10K in debt relief to eligible federal student loan borrowers with annual incomes below $125,000 ($250,000 for married couples) and an additional $10K for Pell Grant recipients. Borrowers with commercially held loans would have been ineligible for this relief, including borrowers with privately held Federal Family Education Loans (FFEL) and Perkins Loans.An initial ruling by U.S. District Court Judge Mark T. Pittman in Texas found Brown and Taylor had standing to sue, and he deemed the forgiveness program unlawful for lacking what he called “clear congressional authorization.”The Supreme Court, however, concluded that Brown and Taylor lacked standing to bring the case and vacated Pittman’s ruling.

State of Nebraska et al. vs Joseph R. Biden Jr. et al.

As mentioned earlier, the states of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina, filed federal complaints challenging the legality of Biden’s one-time forgiveness plan.Before making its way to the Supreme Court, U.S. District Court Judge Henry Edward Autrey dismissed the case in October 2022, finding the states lacked jurisdiction to bring action.All six states appealed that decision to the U.S. Court of Appeals for the Eighth Circuit, which granted an injunction blocking Biden’s program. The appeals court found Missouri “likely has legal standing to bring its claim,” allowing this once-dismissed lawsuit to move forward.The Supreme Court in its decision found Missouri had standing to bring the case, finding the Biden administration’s plan would harm MOHELA, a federal student loan servicer created by the state of Missouri. Then the court ruled on the merits, finding the HEROES Act provides no authorization for the Biden administration’s broad student loan forgiveness plan.

Can Student Debt Relief Still Occur?

The Supreme Court rejected Biden’s one-time debt relief program, but federal student loan borrowers may have other options for student loan forgiveness.Here are some of the debt relief programs you may explore:

Public Service Loan Forgiveness

Public employees with federal student loan obligations may have access to the Public Service Loan Forgiveness program. The PSLF program can forgive the remaining balance on your federal student loans after you have made 120 qualifying monthly repayments as a public employee.

Income-Driven Repayment Plans

The U.S. Department of Education also offers the following income-driven repayment (IDR) options that may grant student loan forgiveness at the end of your repayment period:

What About Private Student Loan Forgiveness?

Private student loans are not eligible for the PSLF program or federal IDR plans, including education loans issued by banks and financial technology companies. Private student loans, however, may qualify for certain state-based debt relief programs, including some New York student loan forgiveness programs.The difference between private and federal student loans is that federal student loans are provided exclusively by the U.S. Department of Education, whereas banks, credit unions, online lenders, and select state-based or state-affiliated organizations may offer private student loans.Private lenders generally have no obligation to offer debt forgiveness on private student loans. You may contact your loan servicer if you have any questions about your student loans.Recommended: How Do I Find My Student Loan Lender?

The Takeaway

The U.S. Supreme Court rejected Biden’s one-time student loan forgiveness program, finding the HEROES Act does not authorize the loan cancellation plan. Federal student loan borrowers may explore other potential loan forgiveness options, such as PSLF. In the meantime, the federal student loan payment pause remains in effect until Aug. 30, 2023.

3 Student Loan Tips

  • Once the pandemic-related pause on federal student loan payments ends, going back to making payments may be hard on budgets. One solution is to refinance to a lower interest rate, longer loan term, or both, depending on your situation. (The tradeoff is that you’ll be forfeiting federal benefits such as repayment programs.) Find and compare your student loan refinance options.
  • Paying extra each month on your student loan can reduce the interest you pay and so lower your total loan cost over time. (The law prohibits prepayment penalties on federal or private student loans.)
  • If you teach full-time for five complete and consecutive academic years in a low-income school, you may be eligible for federal student loan forgiveness.
Compare student loan refinance rates without impacting your credit score.*

Frequently Asked Questions

Does President Biden have the legal authority to forgive student loans?
Is student loan forgiveness still possible?
When will federal student loan payments resume?
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Photo credit: iStock/Andrii Yalanskyi
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About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and served as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.
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