President Joe Biden’s administration will wipe out $39 billion of student debt for more than 800,000 Americans, despite the Supreme Court’s recent decision to strike down the administration's widespread student debt relief plans.
The administration will work around the court’s decision by updating a technical requirement under a long-existing program, according to the Boston Globe.
The Supreme Court struck down a $400 billion student loan forgiveness plan in June. But, through loan-forgiveness rules within the government’s income-driven repayment plans (IDR), Biden’s administration is still able to wipe out billions in student debt for hundreds of thousands of Americans.
Read Also: Biden Administration to Forgive $39B in Student Debt, Providing Relief for Over 800K Borrowers
Falling Through The Cracks: There are many long-term borrowers who have been paying their student loan payments despite qualifying for debt forgiveness measures through the IDR program. The program failed to keep track of which borrowers qualified for forgiveness through mismanagement, according to an investigation from NPR.
Payments Resume: For those who do not qualify under the IDR program, experts have suggested resuming their student-loan payments. Student loan interest is set to resume in September, while payments will restart in October. For those who need assistance with paying off their student loans, there are several different deferment options available.
Deferment Options: The government offers flexible payment options through Income-driven repayment plans that are based on your monthly income as well as family size. For some families, payments could be as low as $0 according to the U.S. Federal Student Aid Office. The Biden administration also announced that people who miss student-loan payments from Oct. 1, 2023 to Sept. 30, 2024, will not be considered delinquent borrowers or reported to credit bureaus.
Stocks Impacted By Resumption Of Student Loans: Several publicly traded loan servicers have been impacted by the Supreme Court's decision to overturn Biden's debt relief plan. Those include Sofi Technologies Inc SOFI, Nelnet Inc NNI and Discover Financial Services DFS. Sofi is trading up about 9% since the Supreme Court's decision on June 30.
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