Student loan borrowers have some clarity on the future of their debts. But it doesn’t look good for those hoping to receive relief.
Black college grads find themselves bearing the heaviest weight of student loan debt, and they’re more likely to default on their loans.
In 2019, the Institute of Assets and Social Policy found that 20 years after starting college, Black borrowers still owed 95% of their original loan amount.
Now, three years after the start of the payment pause, an end date was solidified with the passing of the debt ceiling bill.
However, whether millions of borrowers will receive forgiveness as part of the Biden administration’s relief program hangs in the balance.
Student Loan Repayment Is Coming No Matter What
After weeks of negotiations between President Biden and Republican House Speaker Kevin McCarthy, Congress reached a deal on June 1 on the debt ceiling. The agreement reinforced the restart timeline for student loan repayments — August 29, 2023.
Meanwhile, on June 2, the House of Representatives and Senate passed a Republican-sponsored bill to block President Biden’s relief program and end the payment pause.
The Biden administration announced in Nov. 2022 a plan to restart payments 60 days after implementation, if the Supreme Court ruled in their favor on the expansive student loan forgiveness plan. Or, 60 days after June 30 if the Supreme Court strikes it down.
In a statement, the administration said it strongly opposed the resolution and that it was an “unprecedented attempt to undercut our historic economic recovery and would deprive more than 40 million hard-working Americans of much-needed student debt relief.”
Biden said he would veto the bill.
The Looming Supreme Court Decision
The Supreme Court should announce a decision on the Biden administration’s relief program in early July at the latest. The proposed program would cancel up to $20,000 in federal student loans for qualifying applicants — providing millions with relief.
Over 26 million borrowers applied for debt forgiveness and the administration approved 16 million. But, approvals and processing for these applications halted last year amidst lawsuits.
At a Senate Committee meeting in May, Secretary of Education Miguel Cardona confirmed no further extensions on the pause, and payments would resume 60 days after the Supreme Court ruling.
“We recognize that during the pandemic, it was very difficult for borrowers. And we are committed to making sure that once a decision is made, that we’re going to resume payments 60 days after. But no later than June 30, we’re going to begin that process.”
MIGUEL CARDONA, SECRETARY OF EDUCATION
Cardona said the department wants to ensure a “smooth re-entry to repayment” and noted the administration’s belief that the Supreme Court will rule in their favor.
Payments on outstanding student loans will restart for nearly 44 million Americans.
Even with millions waiting for answers on whether they will receive forgiveness, some already had their loans forgiven. Including borrowers who qualified for Public Service Loan Forgiveness, were defrauded by a for-profit school, or have disabilities.
