Supreme Court student loan hearing: What you need to know

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By CORA LEWIS
Associated Press

NEW YORK (AP) — The U.S. Supreme Court is meeting Tuesday to hear two cases challenging President Joe Biden’s student loan forgiveness plan. At stake: forgiveness of up to $20,000 in debt for more than 40 million Americans. Nearly half of those people could have their federal student debt wiped out entirely.

Already, about 26 million people have applied for debt forgiveness, and 16 million applications have been approved. However, because of court rulings, all the relief is on hold. The Education Department stopped taking applications in November because of legal challenges to the plan.

The Supreme Court will have the ultimate say on whether Biden can wipe out student loan debt, fulfilling a campaign pledge he made in 2020. Here’s what to know if you’re waiting for debt relief.

WHO QUALIFIES FOR BIDEN’S STUDENT LOAN FORGIVENESS?

The plan Biden announced last August would cancel $10,000 in federal student loan debt for those earning less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically come from lower-income households, would receive an additional $10,000 in debt forgiveness, for a total of $20,000.

Federal student loans taken out for graduate school, including federal Graduate PLUS loans, can qualify for forgiveness under the plan.

Borrowers qualify if their federal student loans were disbursed before July 1.

HOW IS THE SUPREME COURT EXPECTED TO RULE ON STUDENT LOANS?

So far, Republican-appointed lower court judges have kept Biden’s plan from going into effect. The Supreme Court is dominated 6-3 by conservatives, but it remains to be seen how the justices will rule. Their questions in the oral arguments Tuesday will give insight into what they’re thinking.

WHEN WILL THE SUPREME COURT DECIDE THE STUDENT LOANS CASES?

The Supreme Court is hearing arguments Tuesday, but there won’t be a decision for months. The court usually issues all of its decisions by the end of June.

HOW DO I KNOW IF MY STUDENT LOANS WILL BE FORGIVEN?

Debt forgiveness, if it goes ahead, is for borrowers holding federal student loans, not private loans.

To determine what kind of loans you hold, log in to the Federal Student Aid website, studentaid.gov. Direct loans, including Parent Plus loans, qualify. Some older FFEL and Perkins loans are also eligible, if owned by the Department of Education. For people holding older FFEL loans, consolidating those loans can lead to credit for forgiveness under certain income-driven repayment plans.

If you’ve already applied and been approved, you should have received an email telling you this.

WILL THE PAUSE IN STUDENT LOAN PAYMENTS CONTINUE?

During the pandemic, two presidential administrations paused payments for those holding federal student loans. The pause has been extended to as late as this summer.

Payments are set to resume, along with the accrual of interest, 60 days after the court cases are resolved. For example, if legal issues remain at the end of June, payments would restart at the end of August. If the court issues a ruling in March, repayment could restart as early as May or June.

If the cases haven’t been resolved by June 30, payments will start 60 days after that.

IS IT POSSIBLE BIDEN’S STUDENT LOAN FORGIVENESS WON’T HAPPEN AT ALL?

Yes.

Biden’s administration is not saying whether it is exploring other options for canceling debt if it loses its court appeals. But advocates point to other ways the debt might be forgiven, including through the Higher Education Act.