Wait, is student loan relief not happening?
26 million Americans thought they were getting student loan relief soon. Now that relief may never come.
“I’m confused, is student loan relief not happening now?”
26 million Americans applied for student loan relief with 16 million already receiving approval (but no actual funds). The Biden administration had projected that at least 10 million Americans were set to have the remainder of their student loans wiped out from the relief. Now, the application portal is closed and everything has come to a grinding halt after a Texas court ruled to block relief.
A federal appeals court has a nationwide temporary injection that will prevent the White House from being able to move forward with the program right now. In this particular ruling, the judge believes the relief plan is unconstitutional and that the executive branch has overstepped its reach in the use of Congressional powers. There are also other arguments that this relief will harm states by hurting their tax revenue and state-based loan agencies.
What does this mean if you have federal student loans?
That’s a good question. The Department of Justice is appealing the decision. However, right now it means that you might not get the $10,000 to $20,000 of relief you thought was heading your way. At the very least, it’s highly unlikely you’ll see that relief by the end of the year as previously believed.
A key move here is to not make any financial decisions under the assumption the relief is coming. The Biden administration seems to believe they’ll prevail in the courts, but that might be a hard road and you shouldn’t make decisions today under the assumption that it’ll work out in your favor.
One big question is whether or not the White House will now extend the student loan payment pause, which is set to resume in January 2023. The White House had taken a fairly firm stance that payments would resume, especially because relief was expected to be paid out starting in November and December. There is certainly a chance they’ll extend again, but no guarantee.
As of this writing, you need to be prepared to start making payments again in January. I would think they’ll probably push back again, but again, don’t make financial decisions based on assumptions. Make them based on the information that’s currently confirmed and in front of you.
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