SCOTUS Will Make A Final Ruling On The Future Of Student Loans Soon

After President Biden introduced his Student Loan Forgiveness Program, six Republican-led states took the issue to the Supreme Court last November. This case has put millions of student loan debt borrowers in limbo.

Now, roughly seven months later, we’ll finally receive a much-awaited answer from the Supreme Court. If SCOTUS justices rule favor student loan cancellation, you could see up to $20,000 wiped from your student loan debt overnight.

Our guide will get you up to speed with the case details and other student loan updates you need!

Who Can Qualify For Student Loan Forgiveness?

So who qualifies for student loan forgiveness if the Supreme Court gives it the green light?

Who qualifies depends on several factors, but it will ultimately depend on the borrower’s income level and if they received a federal Pell Grant as part of their loan package.

To give you more specific numbers, individual borrowers who made less than $125,000 or couples who made less than $250,000 in 2020 or 2021 would qualify for $10,000. You could see up to $20,000 in loan forgiveness if you received a Pell Grant.

Based on White House data, over 90% of the student loan relief would go to those making $75,000 or less.

However, one crucial point is that the cancellation would only include government loans. Student loan borrowers would still be on the hook for private loans unless they consolidated everything before the program was introduced last September.

How Fast Can You See Relief If SCOTUS Approves Biden’s Plan?

If SCOTUS approves Biden’s plan, it would immediately go into effect, and many borrowers would see their debt disappear completely.

Over 8 million people already have their income on file with the Department of Education, so they could receive relief automatically.

Additionally, 27 million applications were kept on file from last fall before the lawsuit. The borrowers that already applied won’t need to go through the process again.

What Happens If SCOTUS Rejects The Plan?

So what if SCOTUS strikes down Biden’s student loan forgiveness program?

Not everything is lost. Under the White House’s recent interpretation of the HEROES Act of 2003, the administration could technically act without congressional approval. However, this would undoubtedly be controversial and could see even more litigation.

If all else fails, the Biden administration must modify its plan to ensure it gets bi-partisan approval, which could take a while. Borrowers would have to make due and continue repaying their loans under the current system.

Will There Be Another Student Loan Pause Extension?

After nine consecutive loan pauses, the student loan freeze will officially end this September, with the first payment due in October.

This agreement was part of the recent debt ceiling agreement between the president and House Speaker Kevin McCarthy.

Regardless of what happens with SCOTUS’s decision, millions of Americans will need to find a way to resume their payments for the first time in years.

How To Prepare For Student Loan Repayments

On the bright side, you still have a few months before payments begin. Right now would be the best time to get in touch with your loan servicer to find out when to pay, how much you own, and how to get started.

Those planning on changing their loan repayment programs should start filing the necessary paperwork to ensure everything is in order before September. If you can, you can also take the time to reauthorize automatic debit from your account so you don’t miss a payment!

When Will SCOTUS Make A Final Decision?

With millions of borrowers awaiting a decision, everyone wants to know when we can expect a final response. June 15th and 16th are the two official calendar days when the court’s opinions are set to be released.

However, there are no actual set dates for their verdict. It’s safe to say we’ll receive their final decision by the end of the month or early July at the latest.

We’ll be keeping an eye on this case, so stay tuned!

The Bottom Line

Biden’s student loan forgiveness program would transform the lives of millions of ordinary Americans.

Whether SCOTUS approves the program, every borrower needs to be prepared for whatever’s next. Knowledge is power, so always keep an eye out for updates!