Everything to know about student loan forgiveness as the Supreme Court focuses on Biden’s debt plan
President Joe Biden promised to forgive some of the student loan debt when he was on the campaign trail. His plan debuted last August.
It has been under fire ever since.
Now, it is facing the Supreme Courtwhere it could be made about whether Biden overstepped his authority.
Why is the administration being sued? Two borrowers said Biden did not give them enough debt relief. Six conservative states said a state-created entity that services student loans faces lost revenue because of Biden’s plan.
Biden’s case has a shot: A majority of justices could say the wrong plaintiffs sued for the wrong reasons.
Borrowers likely won’t learn what will become of their debt for months.
Is Biden’s Student Debt Relief Plan Dead? The Supreme Court could answer four questions
Who is Biden targeting to help with mass debt relief?
Biden suggested eliminate $20,000 in debt for borrowers who also used a Pell Grant to pay tuition. Pell Grants are awarded to students from low-income families. He also wants to erase $10,000 in debt for most other borrowers.
Only borrowers with incomes of less than $125,000, or $250,000 for married couples, would be able to have any debt forgiven.
University funding plan: Find out more about options from savings plans to student loans.
Is it too late to apply for student loan forgiveness?
For now, Yes.
About 26 million people applied for relief before lawsuits stopped the entire program in its tracks. And of those, 16 million were approved to have part or all of their debt written off, depending on their balance.
Even applying for the exemption is not possible after two federal courts blocked the plan on various legal grounds last fall.
About 40 million Americans were estimated to be eligible for the program.
Student debt restructuring blocked: It can hurt Black and Latino families the most
When will the Supreme Court decide the fate of Biden’s student loan debt forgiveness plan?
They can make a statement at any time, and they will probably do so before the end of June.
What is the Biden administration’s Plan B if the Supreme Court permanently blocks it?
“We are not considering or considering any other kind of alternative approach,” said Bharat Ramamurti, deputy director of the National Economic Council. said in January. “We are fully committed to the approach that the education secretary took in this case and we are confident in our legal authority.”
Red states, blue states: Where do recipients of Biden’s student loan forgiveness plan live?
Are there other ways to get student loan debt forgiven?
Yes.
Borrowers who work in public jobs can e.g. search Public service loan forgiveness. Almost anyone, depending on their income, can sign up a plan that reduces payments and clears the remaining balance after a certain number of years of paymentsin what is known as income-driven repayment.
People who attended high schools which misled them about their options after graduation or suddenly closed can also apply to have their debt written off.
Other ways to cut or lower student loan bills: Millions of borrowers have had billions in student loan debt erased. Here’s how you do it.
What about the payment break?
Regardless of what happens in the Supreme Court, payments on federal student loans remain on hold. In addition, the interest rates on these loans are set at zero percent, and debt collection agencies have stopped trying to collect overdue debts.
Payments could remain on hiatus through Augustbut it depends on when the court makes its decision.
Student loan payments are set to restart: Here’s how borrowers should prepare.
What about students who are still in school?
Only loans issued before June 30, 2022 qualify for Biden’s debt forgiveness plan. This means that students who have just started their studies and who borrowed this year are not eligible for the plan, regardless of what happens in court.
If Biden’s plan goes through, will I be taxed?
That depends on the state you live in. The federal government will not tax the relief.
Do you have to pay tax on student loan forgiveness? Yes, if you live in these 7 states
Cast: John Fritze, USA TODAY
Contact Chris Quintana at (202) 308-9021 or [email protected] Follow him on Twitter at @CQuintanadc
Connect with Nirvi Shah at [email protected] or on Twitter: @NirviShah
This article originally appeared on USA TODAY: Supreme Court Student Loan Forgiveness: What you need to know
