Student Loan Forgiveness Officially Blocked: What’s Next?

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The student loan forgiveness plan introduced by the Biden Administration in August has officially been blocked by a federal judge in Texas. As a result, applications for relief are on hold until a final decision is made regarding whether forgiveness can move forward.

President Joe Biden had announced up to $20,000 of forgiveness for federal student loan borrowers. But from the very beginning, several lawsuits emerged to challenge the plan. It was unclear as to if any would succeed based on the lack of standing in many of the lawsuits.

In addition to the block in Texas, the U.S. Court of Appeals for the 8th Circuit granted an injunction on debt relief in a separate case. For now, the plan remains in legal limbo.

Here’s what you need to know about the chances of student loan forgiveness moving forward:

Will student loan forgiveness eventually resume?

The Biden Administration filed an appeal with the U.S. Court of Appeals for the 5th Circuit to reverse the block, requesting a final decision from the court by Dec. 1.

Legal proceedings can take months to decide. So it’s unclear as to when or if student loan forgiveness can move forward. Along with the 5th Circuit ruling, the temporary stay implemented by the 8th Circuit Court of Appeals is also in effect, putting even more roadblocks in front of debt relief.

In response to the 8th Circuit, the U.S. Department of Justice, on behalf of the Biden Administration, filed an emergency request to the Supreme Court to allow the program to proceed while the legality of the program is determined in court.

Given the conservative majority of the Supreme Court, the judges may not rule in Biden’s favor. Previous emergency requests from challengers to debt relief were filed in October, but both were struck down by Justice Amy Coney Barrett. However, that does not necessarily mean this emergency request from the Biden Administration will fail.

At the moment, it’s uncertain whether Biden’s student loan forgiveness program will be able to resume while the courts decide its fate. Cancellation was slated to roll out before the end of the payment pause on Dec. 31, but that is extremely unlikely to happen now.

How does this affect the payment pause?

Currently, payments on student loans have been paused since March 2020, and are set to expire on Dec. 31, 2022. Since 2020, the pause has been extended several times by both former President Donald Trump and President Biden. Federal officials indicated the most recent pause would be the final one, but given the recent legal challenges, it’s possible that Biden could extend the pause into 2023. This would give borrowers more time to figure out how to handle a new payment while the legality of the student loan forgiveness program is being determined.

However, there’s no guarantee this will happen. The Biden Administration is advocating for the Supreme Court to allow the program to move forward because the pause is set to end in December. If the pause resumes without some kind of forgiveness, the Biden Administration argues it could have dire consequences for millions of student loan borrowers.

Solicitor General Elizabeth Prelogar said in the recent filing, “Because borrowers who default on their student loans face severe financial consequences — including wage garnishment, long-term credit damage, and ineligibility for federal benefits — Congress specifically authorized the Secretary (of Education) to waive or modify any applicable statutory or regulatory provision as he deems necessary to ensure that borrowers affected by a national emergency are not worse off in relation to their student loans.”

Does this affect the new Income-Driven Repayment plans?

The block does not affect the new income-driven repayment (IDR) plans. Along with the student loan forgiveness announcement in August, the Biden Administration also announced an overhaul of its income-driven repayment plans. The new changes would benefit 30% of student loan borrowers who are currently enrolled in an IDR plan.

Here’s what the new plan entails:

Monthly payments are capped for borrowers at 5% of their discretionary income, instead of the current 10%. The White House estimates that this will lower the average annual student loan payment by more than $1,000 for current and future student loan borrowers.
Forgive balances after 10 years instead of 20 years for balances of $12,000 or less.
Non-discretionary income amount will be raised, ensuring that no borrower earning under 225% of the federal poverty level will make a monthly payment.

Check Out: Federal Student Loan Repayment Options

What can you do in the meantime?

You have a few options for your student loan payments, including:

Ask for a refund of prior payments. If you took advantage of the 0% interest rate and made payments since the pause was first enacted, you’re qualified to request a refund for those payments from your loan servicer. If you take this route, it’s best to hold onto that refund until a final decision regarding forgiveness has been reached. If forgiveness moves forward and is applied, you’ll be able to put your refund toward other financial goals.
Keep making payments. It’s a good idea to pay toward your balance monthly if you’re able. If the pause is extended, any payments you make will help pay down your principal. The 0% interest rate works in your favor even if it’s extended for just a few months. The more you put down, the more likely you’ll have a lower payment when the extension ends. Even if there is no extension, you’ll still have to make payments. If you’re unable to make payments, consider enrolling in an income-driven repayment plan.
Request deferment or forbearance. By demonstrating economic hardship, and meeting other qualifications, you could request deferment of your payments or forbearance from your loan servicer. Both options pause your payments for an allocated number of months.
Consider refinancing. If student loan forgiveness is ultimately blocked and your payments are too substantial, refinancing can be a great alternative to lowering your interest rate. And by choosing a shorter repayment term, you could potentially pay off your student loans faster.

If you decide refinancing is right for you, visit Credible to compare lenders and rates.

The student loan consolidation companies in the table below are Credible’s approved partner lenders. Because they compete for your business through Credible, you can request rates from all of them by filling out a single form. Then, you can compare your available options side-by-side. Requesting rates is free, doesn’t affect your credit score, and your personal information is not shared with our partner lenders unless you see an option you like.

Lender	Variable rates from (APR)	Fixed rates from (APR)
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	N/A	2.94%+
Fixed APR: 2.94%+ Variable APR: N/A Min. credit score: Does not disclose Loan amount: $7,500 up to $500,000 Loan terms (years): 10, 15, 20 Max. undergraduate loan balance: $250,000 – $500,000 Time to fund: 4 days Repayment options: Immediate repayment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Must be a U.S. citizen or noncitizen with proof of residency card, have an acceptable income and credit history or an approved cosigner, and have entered grace or repayment on the loans he or she wants to refinance Customer service: Phone Soft credit check: Yes Cosigner release: After 12 months Loan servicer: Kentucky Higher Education Student Loan Corporation Max. graduate loan balance: $250,000 – $500,000 Credible Review: Advantage Education Loan review Offers Parent PLUS Refinancing : Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.43%+	3.85%+
Fixed APR: 3.85%+ Variable APR: 5.43%+ Min. credit score: 690 Loan amount: $10,000 to $400,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of Texas Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 – $149,000 Max. Graduate Loan Balance: $200,000 – $400,000 Offers Parent PLUS Refinancing: Does not disclose
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.09%+¹	5.39%+¹
Fixed APR: 5.39%+¹ Variable APR: 5.09%+¹ Min. credit score: Does not disclose Loan amount: $10,000 to $750,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay, loyalty Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $150,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	3.69%+²	4.49%+²
Fixed APR: 4.49%+² Variable APR: 3.69%+² Min. credit score: Does not disclose Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 12, 15 Repayment options: Military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay Eligibility: All states except for ME Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: College Ave Servicing LLC Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $300,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.91%+⁵	5.91%+⁵
Fixed APR: 5.91%+⁵ Variable APR: 6.46%+⁵ Min. credit score: 700 Loan amount: $7,500 to $200,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and submit two personal references Customer service: Email, phone Soft credit check: Yes Cosigner release: After 36 months Loan servicer: Granite State Management & Resources (GSM&R) Max. Undergraduate Loan Balance: $150,000 to $249,000 Max. Graduate Loan Balance: $150,000 to $199,000 Offers Parent PLUS Refinancing : Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	2.99%+³	4.48%+³
Fixed APR: 4.48%+³ Variable APR: 2.99%+³ Min. credit score: 680 Loan amount: $10,000 to $250,000 Loan terms (years): 5, 7, 10, 12, 15, 20 Repayment options: Forbearance Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved school Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: Mohela Max. Undergraduate Loan Balance: $250,000 Max. Graduate Loan Balance: $250,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.12%+⁴	5.18%+⁴
Fixed APR: 5.18%+⁴ Variable APR: 5.12%+⁴ Min. credit score: 670 Loan amount: $5,000 to $250,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Academic deferment, military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must be U.S. citizen or permanent resident Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: Yes Max undergraduate loan balance: $250,000 Max graduate loan balance: $250,000 Offers Parent PLUS refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	N/A	4.75%+
Fixed APR: 4.75%+ Variable APR: N/A Min. credit score: 670 Loan amount: $10,000 up to the total amount Loan terms (years): 7, 10, 15 Repayment options: Military deferment, loans discharged upon death or disability Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: AES Max. Undergraduate Loan Balance: No maximum Max. Gradaute Loan Balance: No maximum Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	N/A	5.49%+
Fixed APR: 5.49%+ Variable APR: N/A Min. credit score: 670 Loan amount: $7,500 to $300,000 Loan terms (years): 5, 8, 12, 15 Repayment options: Does not disclose Fees: None Discounts: None Eligibility: Must be a U.S. citizen and have and at least $7,500 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 12 months Loan servicer: PenFed Max. Undergraduate Loan Balance: $300,000 Max. Graduate Loan Balance: $300,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	N/A	5.29%+
Fixed APR: 5.29%+ Variable APR: N/A Min. credit score: 680 Loan amount: $7,500 to $250,000 Loan terms (years): 5, 10, 15 Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000 Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Loan servicer: Rhode Island Student Loan Authority Max. Undergraduate Loan Balance: $150,000 – $249,000 Max. Graduate Loan Balance: $200,000 – $249,000 Offers Parent PLUS Refinancing: Yes
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Learn More: What to Know About the CARES Act and Student Loans

About the author

Jared Hughes

Jared Hughes is a Student Loans Editor and Credible authority on student loans and personal finance.

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