The Biden administration’s student loan forgiveness plan was set to provide borrowers with up to $20,000 in loan forgiveness. This plan promised loan forgiveness for about 40 million Americans, with 26 million Americans already applying.
However, on Monday, Nov. 14, the Eighth Circuit Court of Appeals blocked Biden’s plan, arguing that the Biden administration was attempting to exceed its executive powers. This ruling comes in response to a lawsuit filed by six states claiming that Biden’s student loan forgiveness plan would harm state-based loan companies. Originally, the case was dismissed, but the states successfully appealed and the Biden administration was forced to temporarily pause applications to the student loan forgiveness program. Applications will be paused again, following the Texas court ruling from last Thursday that ruled the plan unlawful.
The Biden administration plans to appeal the ruling, but this process could take weeks. The case will first be heard by the Fifth Court Appeals and will likely be appealed by either side to the Supreme Court. Typically, the appeals process takes around six months, but the courts have accelerated the process due to the significance of the case. It’s currently unclear if the case will be resolved by Jan. 1, when loan repayments are set to restart.
The Eighth Circuit Court of Appeal is the second court to block the loan forgiveness plan.These courts’ decisions leave 26 million with financial uncertainty as Jan. 1 approaches. Though these abrupt rulings are difficult to navigate, there are still steps you can take now to help ensure your financial stability.
- Plan to make full repayments on Jan. 1, 2023.
Whether you have applied for forgiveness yet or not, plan on making your full student loan payments on Jan. 1. It is currently unclear if the case will be resolved by the start of the new year, and the case may not be decided in the favor of the Biden administration. Even if the court rules in favor of the Biden administration, borrowers who have not yet applied may need to repay their loans at their full rate for a few months because it takes around four to six weeks to process applications.
- Be in the know.
In the coming weeks and months, the courts will be making key decisions on the Biden administration’s student loan forgiveness plan. It’s important to stay up to date on these decisions, and there’s a few simple ways to be in the know. The Studentaid.gov website provides updates, and you can even subscribe to get information and updates sent directly to your inbox. The official White House and the U.S. Department of Education social media accounts make it easy to stay up to date as you scroll.
- Prioritize your mental health.
There’s no denying that the halting of student loan forgiveness is stressful, and three-quarters of Gen Z already experience stress and anxiety related to their finances. Make your mental health a priority by learning coping tools to help with money anxiety. Lance Briggs, a psychiatric clinician, recommended to Her Campus practices like recognizing the power of conscious thought and focusing on three different sensations to help with this anxious feeling.