2023 Student Loan Forgiveness Update: The Good, the Bad, and the Ugly

Federal student loan forgiveness has been through a lot recently. She’s not looking pretty. She needs a massage. Her T-zone is breaking out. Which means this article does not reflect the current state of loan forgiveness. We’re leaving it up because we think it contains useful context. But if you want our most current news on student loan forgiveness, you can find it here.

Remember back in August of 2022 when we were all stoked to hear about the Biden Administration’s plan to forgive federal student loan debt? Yeah. Things have changed.

I’m here to update you on the status of federal student loan forgiveness. Shit’s complicated though, so if you didn’t read our FAQ about the program when it was first announced, you might want to get that background before reading any more. Go ahead, we’ll wait.

Now that you have the background, I’ll give you the latest on where federal student loan debt forgiveness stands, along with some guidance on what student loan borrowers can do from here. Spoiler alert: there’s Bitch-on-Bitch drama at the end.

The good

The good news is that the Biden-Harris administration is still fighting for student loan debt forgiveness. Their plan is on hold for now, but it hasn’t been canceled. It’s just mired in legal challenges that need to work their way through the courts (we’ll get to that).

Meanwhile, they’ve put a temporary pause on accepting applications for loan forgiveness on the government’s site. At the moment, you can’t apply for federal student loan debt forgiveness. Though if everything works out and the debt forgiveness plan moves forward, you’ll be able to apply at that time.

If you’ve already applied, you don’t need to apply again later—they’ll hold your application in stasis. You can subscribe to the Department of Education for news and updates regarding the status of student loan debt forgiveness and your application. Or just stick with us—we’ll keep you in the loop!

Student loan payments are on hold

Fortunately for borrowers of federal student loans, the administration has extended its COVID-19 relief for federal student aid program. This first went into effect in 2020 and has been extended multiple times. The relief plan includes:

1. A suspension of loan payments. Meaning if you can’t afford to pay your loans (or you just don’t want to), you don’t have to pay them.
2. A 0% interest rate on federal student loans. Meaning those loans you may or may not be paying aren’t accruing interest for the time being.
3. Stopped collections on defaulted loans. Meaning you aren’t getting punished for any student loans that were in default at the time the relief program went into effect.

It’s not a trap—you really can stop paying your federal student loans! But you still have to pay back your private loans. So learn the difference.

The hold on student loan payments is currently set to extend until the Department of Education is allowed to put the debt forgiveness program in action… or when “the litigation is resolved“… or June 30, 2023. Whichever happens first. And then you’ll have to start making payments again 60 days later, in August of this year.

So you have time to decide what to do about those on-hold student loans, whether or not the Biden-Harris administration wins the case for forgiving zillions of dollars of federal student loans.

The bad

The bad news is that multiple lawsuits have been filed against the federal government aimed at stopping student loan debt forgiveness in its tracks. While those lawsuits work through our legal system, the courts have issued orders blocking the administration’s debt relief program. Rest assured that the administration is seeking to overturn those orders… but we have no idea how long that could take.

There have been half a dozen court cases in various Circuit Courts of the Eastern District of Terabithia or whatever. Some have been resolved, others have moved up the pyramid of more and more prestigious courts… the point is it’s complex. So instead of trying to break down each case in tedious legal detail, I’m going to give you a summary of what I feel is most relevant to student loan borrowers at this time.

The first lawsuits against student loan debt forgiveness

The first of the lower court challenges to student loan debt forgiveness were predicated (LAWYERLY WORD ALERT) on the following:

1. The forgiveness plan is exclusionary. A plaintiff wasn’t entitled to the debt relief because she had commercial loans, rather than federal student loans. And another plaintiff couldn’t get debt forgiveness because he didn’t receive a Pell Grant while he was in college. These folks were excluded from the plan, and therefore it shouldn’t be legal.
2. The forgiveness plan will hurt certain businesses. A major servicer of student loans would lose revenue because they wouldn’t get to collect interest and fees on forgiven student loans. BIG GOV’MINT COMING AFTER SMALL BUSINESSES YET AGAIN, AMIRITE?

In my (extremely uneducated) opinion, these lawsuits are steamy, creamy bullshit.

The federal government excludes certain people from benefits all the time. Renters are excluded from the mortgage interest tax deduction! Childfree folk are excluded from child and dependent tax deductions! Some programs benefit some people, and some programs benefit others. If you approach every government financial benefit with “What’s in it for me?” you’re probably going to be disappointed half the time.

And I have nothing—not even the world’s tiniest violin—to spare for the lost revenue of debt servicers. Again: the federal government does things all the time that hurt certain sectors of business. This is exactly the attitude that is making it so hard to enact environmentally friendly energy policies: because it will hurt the oil and gas industry. But that doesn’t mean environmentally friendly energy policies are a bad idea. Same goes for forgiving student loans, even if it hurts debt servicers.

Student loan debt forgiveness in the higher courts

Most of those lower court cases have been resolved. But some have advanced to the Supreme Court—the final boss of the student loan game, if you will.

The premise of these two main lawsuits against the administration’s loan forgiveness plan is that the president just… can’t do that. President Biden is exceeding the bounds of his power by not including Congress in this decision. He’s going around them to enact major policy. And they hate that.

Scratch the surface of that complaint and it’s not even an argument against forgiving federal student loans… just an argument against how it was done. Protocol is sacrosanct, y’all!

The administration’s defense is that under the HEROES Act of 2003, the president has the authority to forgive student loans in the time of a crisis. And COVID-19 is that crisis.

… is what the lawyers are saying. Aaaaand so the Supreme Court will hear the first of these lawsuits starting Feburary 28th. This lawsuit is being brought by the states of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina.

The ugly

The vast propaganda machine that passes for political discourse in our country has turned this into a culture war. We did a whole podcast episode about it!

Notice anything about the six states suing to stop student loan forgiveness in the Supreme Court? Here’s a hint: the other lawsuit is being brought by Texas.

These states are all led by Republican lawmakers. They’ve politicized the question of student loan debt forgiveness, even though the people that would benefit most from student debt relief live in deep-red states! And a majority of Americans are in favor of student loan forgiveness!

The legal argument based on protocol is also baldly political. Conservative lawmakers know damn well that without a democratic majority in the House of Representatives (a majority the Democrats currently do not have), Congress is extremely unlikely to pass legislation on student loan debt forgiveness. The presidential use of the HEROES Act to get this done is literally the only way it can be done at this time. All of which makes it real easy for anti-loan-forgiveness politicians to claim the Biden-Harris Administration is taking advantage of the president’s power to pass the Democrats’ policy agenda.

Kicking the question over to the Supreme Court doesn’t solve the politics of it all. That’s because the Supreme Court has recently been voting down political party lines in its rulings. And since the last president was able to secure a conservative majority in the Supreme Court…

You guys, I can’t even scream about how important it is to vote anymore. This is why. This is literally why.

What’s next for student loan debt forgiveness?

Whew! That was a lot of political commentary. You probably need a breather. Here, have this gif of a basset hound shaking water off his glorious ears and magnificently droopy lips:

If and/or when the Supreme Court kills the administration’s plan for student debt forgiveness, the Biden-Harris administration will have a few options to keep fighting:

1. They could give up entirely.
2. They could push Congress to get involved and pass debt forgiveness on their own. But that’s not likely to go smoothly (see above).
3. They could call the Court’s decision an unjust ruling and campaign for debt forgiveness with voters. The idea is to increase the plan’s popularity among the constituents of the conservative lawmakers. But winning hearts and minds won’t actually win us debt forgiveness.
4. They could try to take an entirely different legal approach to forgiving student loans again.

What’s a student loan borrower to do?

Ever since student loans were put on hold, we’ve been shouting the same advice: If the interest rate‘s nil, don’t pay that bill!

Whether you’re optimistic or pessimistic about the outcome of the legal battle, it’s a good idea to take your student loan payments and save them up. Put them in a HYSA—interest rates are bananas right now! You can earn interest on those savings, and then if the administration’s debt forgiveness plan is defeated, you’ll have a little extra to put towards your loans. And if it succeeds, then you’ll have saved a nice fat emergency fund.

If your student loan situation is dire, you can use this time to look at your options. Consider applying for income-based repayment, or an economic hardship deferment, or even further student loan forbearance. Even if the administration doesn’t come through, you have options.

One last thing…

Remember how Kitty and I argued about whether or not federal student loan forgiveness would ever actually happen? How she was blissfully optimistic about it being a real possibility? And how I was all “I’ve heard this campaign promise since John fucking Kerry so I’ll believe it when I see it”? And how in August she gloated about how she was right and I was wrong?

If I were a less humble person, I would be rubbing her nose in all that hubris! I’d be shaming her for counting them chickens before they hatched! I’d be dancing on the grave of her rightness and singing about how wrong she was!

But I won’t be doing any of that. Because…

Clearly, we have Thoughts™ about student loans, the cost of higher education, and student loan forgiveness. Read all about ’em here:

• What We Talk About When We Talk About Student Loans
• I Paid off My Student Loans Ahead of Schedule. Here’s How. 
• I Paid off My Student Loans. Now What?
• Ask the Bitches: “The Government Put Student Loans in Forbearance. Can I Stop Paying—or Is It a Trap?”
• When (And How) To Try Refinancing or Consolidating Student Loans 
• Season 3, Episode 1: “I Worry Paying for My Kids’ College Will Spoil Them. Don’t Student Loans Build Character?” 
• Ask the Bitches: I Want To Move Out, but I Can’t Afford It. How Bad Would It Be To Take Out Student Loans To Cover It?
• How To Pay for College Without Selling Your Soul to the Devil 
• The 2022 Student Loan Forgiveness FAQ You’ve Been Waiting For

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