The Supreme Court Blocked Student Loan Forgiveness, Now What?

A sign that reads student debt is shown in this photo in front of the U.S. Supreme Court's building.
A sign reading "Student Debt" is seen outside the Supreme Court, Friday, June 30, 2023. The Supreme Court has ruled that the Biden administration overstepped its authority in trying to cancel or reduce student loan debts for millions of Americans. Conservative justices were in the majority in Friday’s 6-3 decision that effectively killed the $400 billion plan that President Joe Biden announced last year. AP Photo by Mariam Zuhaib

For student loan borrowers across the nation, Black Friday came on June 30, 2023 — and it was marked by the Supreme Court decision to block Biden’s student loan forgiveness plan.

The plan would have allowed the U.S. government to cancel $20,000 in federal loans for Pell Grant recipients and up to $10,000 for millions of other borrowers.

With the 6-3 vote, 43 million borrowers will also now begin resuming payments as early as October 2023. Under the plan, around half of said borrowers would have seen their loan debt completely eliminated.

While the ruling will affect borrowers across all age groups, those aged 35 to 49 will be hit the hardest, as they hold more than $600 billion of the total of the nearly $1.8 trillion owed.

The U.S. Department of Education received more than 26 million forgiveness applications — 16 million of which had been approved — before closing the application in the face of court challenges.

After this groundbreaking decision, what’s next for student loan borrowers?

After Supreme Court Ruling, Borrowers Still May Have Options

With payments set to resume in just a few months, those 43 million borrowers might be scrambling to pay their student loan bills without going into default.

According to NPR, President Joe Biden plans to announce new protections for student loan borrowers following the Supreme Court’s decision.

“I believe that the court’s decision to strike down our student debt relief plan is wrong,” Biden said in a statement hours after the decision. “But I will stop at nothing to find other ways to deliver relief to hard-working middle-class families. My administration will continue to work to bring the promise of higher education to every American.”

In the meantime, there are a few ways you may be able to lower your student loan debt or payments.

1. Find Out if You Qualify for the Public Service Loan Forgiveness Program

Since 2007, the Public Service Loan Forgiveness Program (PSLF), has helped those who work in public service — health care, education, social services and so on — get out of student loan debt quicker as long as they followed some strict, and often confusing, guidelines.

The program has been notoriously mismanaged, but it underwent an overhaul in 2022 with a renewed commitment from the Biden administration. Though the PSLF waiver — which had less stringent rules — expired in October 2022, the program is still available if you work in public service.

You can use the PSLF help tool to determine whether you have a qualifying employer and what other steps you might need to take to become eligible for PSLF.

2. Look for Other Forgiveness Programs

About 43 million Americans currently have an average of $37,717 in student loan debt — meaning the large majority of borrowers are not public service workers and will not qualify for the PSLF program.

If you find yourself in that group, you have other options. You might have other ways to get your loans forgiven, canceled or discharged. You could qualify if:

  • You’re permanently disabled.
  • You file for bankruptcy (very conditional based on the amount and type of debt).
  • Your college falsely certified your eligibility for the loan.
  • You become a teacher in a lower income school.
  • You volunteer for the Peace Corps.
  • You become a child or family services worker.
  • You’re in the armed forces and serving in a hostile area.
  • You fit one of the forgiveness and discharge forms on the DOE site.

3. Tackle Your Student Loan Payments

If you’re out of forgiveness options, the reality is you might be on the hook for making payments on the amount you borrowed.

While that might not be ideal, the good news is that you can build a solid plan to get out of debt.

Here are a few ideas:

  • Pay off as much of your balance as you can before administrative forbearance ends. When the forbearance ends Sept. 1, 2023, your balance will start accruing interest again. It’s to your advantage to put as much of a dent in your balance before the interest starts piling on.
  • See if you’re eligible for income-driven repayment plans. Federal student loans have a standard repayment plan of 10 years. If you’re struggling to make those payments, you have several payment plan options that include an Income-Based Repayment Plan, Income-Contingent Repayment Plan, Pay-As-You-Earn Plan, and a Revised Pay-As-You-Earn Plan.
  • Lower your interest rates. Though federal student loans already have low interest rates, you can still check into lowering your interest even more. If you sign up for auto debit, most servicers will also lower your interest rate by 0.25 percentage points.
  • Make a plan for repayment. Whether it’s the debt avalanche method or the debt snowball, there are plenty of proven ways to knock out significant debts. If you’re motivated by math, the slight savings of the debt avalanche might appeal to you. If you’re motivated by quick wins, the mini-wins you’ll experience early with the debt snowball can get you through those tough first months.

As you pay off student loan debt, consider getting a side hustle to bring in additional income and make extra payments.

Robert Bruce is a senior staff writer at The Penny Hoarder covering earning, saving and managing money. He has written about personal finance for more than a decade.