2023 will likely be the year when borrowers learn how it will impact their wallets.
This was the year the White House embraced the idea of mass student-loan forgiveness, but 2023 will likely be the year when borrowers will find out whether the policy will actually impact their wallets.
“2023 is going to be a huge year in the student-loan world,” said Persis Yu, deputy executive director at the Student Borrower Protection Center, an advocacy group.Mass student-debt relief Almost as soon as President Joe Biden announced in August that his administration planned to cancel up to $10,000 for borrowers earning $125,000 or less and up to $20,000 for borrowers who used a Pell grant in college, opponents looked for strategies to mount a legal challenge.
In striking down the debt-relief plan, Pittman, who was appointed to the bench by Trump, took the unusual step of moving quickly to decide the merits of the case instead of taking the time to determine whether the plaintiffs had standing first. Predicting how the justices will rule is hard to do. Supporters of the debt-relief policy as well as Biden administration officials have said they’re confident in their legal authority. Still, in recent years the Supreme Court has viewed certain types of executive agency action — including the Environmental Protection Agency’s efforts to regulate emissions and the Biden administration’s extension of the pandemic-related eviction moratorium — skeptically.
Part of what’s at issue in the lawsuits is whether the HEROES Act — a 2003 law that allows the Secretary of Education to provide debt relief to borrowers during a national emergency — gives the Department of Education the authority to cancel student debt en masse. The government’s lawyers have argued that one goal of the law is to ensure that borrowers won’t be left worse off financially by a disaster.
In addition, Mayotte said it’s important to make sure the Department of Education and student-loan servicer has your updated contact information so they can know where to reach you. Yu said she’ll be looking to see whether borrowers with Parent PLUS loans, or the federal debt that parents can take on to pay for their childrens’ schooling will be included. Right now, borrowers with Parent PLUS loans can only access one plan that allows borrowers to pay off their debt as a percentage of their income — income-contingent repayment — and it’s the least generous of the options available.
In addition, the Biden administration said that the amount of income protected from repayment will rise to 225% of the poverty line. That means that a borrower earning $15 an hour could pay $0 a month and stay current on their loans under this plan. Earlier this year, the Department announced that it would review borrowers’ payment counts and adjust them so that monthly payments that should have brought a borrower closer to the number needed for forgiveness will now count towards relief. Borrowers should expect to see these adjustments reflected this summer, including some who may have their loans forgiven as a result.
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