Supreme Court Denies Student Loan Debt Relief: 5 Alternative Solutions

Supreme Court Denies Student Loan Debt Relief

The Supreme Court recently denied student loan debt relief in a 6-3 ruling. The student debt relief proposal would have wiped out $400 billion in student debt. After the ruling, President Biden stated, “This fight is not over.” However, with student loan payments resuming after August, borrowers will have to adjust to the ruling and resume their monthly payments. Planning ahead of time can make student loan payments more manageable.

Understanding the final decision of the Supreme Court

The Supreme Court claims that President Biden overstepped his authority with his student loan debt relief plan. While the Court does not believe the Executive Branch has the power to wipe away student debt, the justices did not make the same ruling for Congress. Congress can still attempt to implement a student loan debt relief plan.

There is technically a path for student loans to receive partial or full forgiveness, but borrowers shouldn’t count on it. 

History of the student debt relief plan 

President Biden went into the 2020 campaign promising student debt forgiveness if he became President. Upon becoming President, Biden instructed the Department of Education to pause student loan payments until September 2021. This pause had multiple extensions and now faces its conclusion at the end of August 2023.

Biden announced his proposal to cancel up to $20,000 of student debt for eligible borrowers in August 2022. Many lawsuits followed and brought the case to the Supreme Court. This student loan debt relief plan was denied on June 30, 2023

Potential impact of the decision on students and borrowers

The decision to nix the relief plan has several ramifications for students and borrowers. Here are some of the impacts.

1. Increased financial burden on student loan borrowers 

Student loan borrowers will have an extra monthly expense at the end of August. Resuming student payments will increase the financial stress of borrowers. Student loan borrowers haven’t been required to make payments since the start of the pandemic.

2. Inequality and social impact 

Students from lower-income backgrounds have a more difficult path to enter college because of higher student loans. Students may have to take out more student debt because colleges have raised their tuition by 4.6 times the rate of inflation. If lower-income students feel priced out of colleges, it can limit opportunities for upward mobility. Universities can address this problem and strengthen their equity initiatives by pausing tuition hikes and lowering the costs students incur to obtain a diploma. 

3. Impact on higher education institutions 

No relief for student debt combined with high tuition can discourage students from pursuing higher education. Universities aren’t the only option, as students can get online certificates that enable career growth, enroll in more affordable community colleges, or learn at a craft school. The playing field is more competitive, and a survey revealed that 80% of employers prioritize skills over degrees

4. Reduced economic stimulus 

Discretionary spending may take a hit when student loan payments resume. Instead of spending hundreds of dollars on retail shopping, dining, and other discretionary items, consumers would have to allocate some of those funds to student loan payments. 

Businesses that rely on discretionary spending may have a more difficult time hitting revenue goals, keeping their current staff, and staying in business. The sudden return of student loan payments can financially weaken small businesses. Declining consumer activity could also impact corporations’ earnings reports, an outcome that may affect investors’ retirement portfolios.

5. Political implications 

Politicians in favor of the student debt relief plan remain publicly committed to finding an alternative path to enforce the plan. Opponents of the plan may use the Supreme Court’s decision to strengthen their political campaigns. While the Supreme Court issued its decision at the end of June, the student debt relief plan may remain a talking point in the upcoming political cycle.

What should you do now with your remaining student debt?

Approaching your student debt with a plan can minimize the costs and ease financial stress. You can use these strategies to get out of student debt faster.

1. Look into loan forgiveness programs

The government still has some loan forgiveness programs for qualifying professions. People employed full-time at the government or a non-profit organization can qualify for Public Service Loan Forgiveness. You can have your debt forgiven after making 120 qualifying monthly loan payments.

2. Consider refinancing

If you have a high interest rate on your student loan, you might qualify for a lower rate through a refinance. When you refinance, you replace your current loan with a new one. Some people add more years to their loans to secure lower monthly payments in the present. 

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3. Research income-driven repayment plans 

Income-driven repayment plans take the borrower’s income and family size into account when determining monthly payments. These plans make the monthly payments more manageable. You can explore plans like Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).

4. Consolidate your loans

Debt consolidation lets you combine several small loans into a large loan. This strategy makes your debt more manageable since you have fewer monthly payments. You still owe the same amount, but you can add more years to the loan for lower monthly payments. Some borrowers also secure lower interest rates by consolidating their debt.

5. Set up automatic payments

Automatic payments ensure you make on-time payments toward your student debt. On-time payments will help you minimizing extra interest and added late fees. Making payments on time could also improve your credit score. If you have extra money to spare, you may want to consider paying more than the minimum monthly payment. Paying a little extra reduces the principal quicker and lets you become debt-free sooner. 

Navigating Student Debt Payments

Student loan payments return by the end of August. It’s important to create a plan and get a jumpstart before those payments resume. Keeping a careful eye on your expenses, picking up a side hustle, and exploring career advancement opportunities can make you more prepared when student loan payments resume.


Can the Supreme Court decision on student loan debt relief be overturned?

The Supreme Court’s decision on student loan debt relief can be overturned, but it is extremely unlikely to happen now. Decisions that do get overturned tend to receive that judgment from a new group of justices.

Are private student loans eligible for debt relief?

Private student loans are not eligible for debt relief.

Can you still qualify for student loan debt relief if you’re currently studying?

You can still qualify for student loan debt relief if you are currently studying.

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