NEW YORK, March 14, 2023 (Newswire.com) - Credello: President Biden's executive order forgiving student loan debt for millions of Americans is in front of the Supreme Court (SCOTUS) to determine whether or not it can go through. Here's what you should know.
What happens if student loan forgiveness is struck down?
If SCOTUS should determine that Biden's executive order is unconstitutional, they may strike it down. If that happens, those with outstanding student loans would still be able to get relief through the government's other loan forgiveness programs- such as Public Service Loan Forgiveness and Perkins Loans - but they would not be able to use Biden's order.
However, the eligibility rules for these programs are strict and the majority of U.S. citizens will not qualify. If you're one of the millions who wouldn't be eligible, you have a few options:
- Consolidate your outstanding loans into a single personal loan - This may be a quicker solution than you think. As for how long it takes to get a personal loan the process can take anywhere from a few minutes to weeks. If you're applying for a personal loan online it could just be minutes but then the actual approval process may take a few days, especially if the lender needs to verify your income and creditworthiness. Pay attention to interest rates and ensure you're getting the best deal possible
- Keep an eye on the Department of Education's website - There may be new options available for refinancing your loans via the DOE if loan forgiveness is found to be unconstitutional. No updates are being given just yet, but there may be a backup plan from the federal government soon.
- Your loans may still be frozen for the time being - Even if student loan forgiveness is struck down, that doesn't mean your loan payments will be due immediately. There is a chance President Biden will continue having student loans frozen, as it's a good political move for appealing to Millennial and Gen Z voters come election time. If loan forgiveness does go through, then you'll have a solid nest egg of money you can put towards a rainy day, retirement, or putting a down payment on a home.
- Prepare your budget for the worst-case scenario (it's a win-win either way)- If student loan debt is a big problem for your finances, you shouldn't wait til the last minute to start creating your own "Plan B" should the EO get struck down. Start reworking your budget and put money away that you can put towards your student loan debt if payments start up again soon. That way, you'll have a chunk of money set aside that you can put toward your principal, reducing the amount of debt that accrues interest. If loan forgiveness does go through, then you've got a nice nest egg of money you can put towards a rainy day, retirement, putting a down payment on a home, whatever!
What happens if SCOTUS allows student loan forgiveness?
If SCOTUS rules that President Biden acted within his powers and that the executive order is legal, the plan to cancel certain types of student loan debt will immediately go into action.
To be eligible for forgiveness you must:
- Have an income under $125,000 for individuals or $250,000 for couples
- Have received a Pell Grant in college (you will receive up to $20,000 in debt relief) OR
- Have received a student loan from the federal government (you will receive up to $10,000 in debt relief)
Unfortunately, it's too late to apply for relief from this program, as the deadline passed last October. However, there may be new options once this first round is decided in the courts.
The bottom line
As SCOTUS weighs the legality of President Biden's executive order, it's important to stay up to date on the latest news via the Department of Labor's website. This way, you'll be able to make informed decisions about your own financial future and can plan accordingly.
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Original Source: Biden's Student Loan Relief Plan is Facing the Supreme Court This Week. Here Is What You Need to Know.