New Student-Loan Relief Rules Are Being Finalized
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Here's your Money Briefing for Thursday, August 1st. I'm J.R. Whelan for The Wall Street Journal. Since the Supreme Court voted down President Biden's student loan forgiveness plan last year, millions of borrowers have been making their monthly payments as usual. But elements of the president's new plan are still facing legal challenges. And this week, Biden sent an email blast with an update.
The Biden administration has rolled out and is still developing a new plan that's based on a different law than the previous plan was. And there are lots of different parts of that plan that affect different borrowers with different income levels and other categories.
So where do things stand? Wall Street Journal personal finance reporter Catherine Hamilton will bring us up to speed on student loan forgiveness efforts after the break.
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com slash Washington Wise.
The White House is renewing its push to have student loans forgiven. Wall Street Journal personal finance reporter Katherine Hamilton joins me. Katherine, bring us up to speed for a moment. What's happened to forgiveness efforts since the Supreme Court struck down President Biden's plan last year?
The Biden administration has rolled out and is still developing a new plan that's based on a different law than the previous plan was. And there are lots of different parts of that plan that affect different borrowers with different income levels and other categories. And overall, the plan promises to forgive at least some federal loans for about 25 million borrowers. And one of the parts of that overall plan is the SAVE plan, which has seen some legal challenges already.
That's the SAVE plan, saving for a valuable education. That was blocked by an appeals court last month. What is the SAVE plan and how did that affect people's loans?
The safe plan is part of this new plan that the Biden administration is rolling out. It affects primarily lower and middle income borrowers. But the most recent legal challenge, Missouri court basically put the entire plan on halt and they're trying to establish whether or not they think Biden is overstepping his bounds as president by establishing the SAVE plan. So until they make that decision, that plan is on hold.
What is the current status of Biden's student-loan forgiveness effort after the Supreme Court ruling?
So right now, everybody's loans are in forbearance without interest, which means they don't need to pay their loans right now and they're not accruing interest on those loans.
Does that mean the interest on their loan is forgiven?
Not quite. They don't need to pay their loans for now and they're not accruing interest on their loans at this time.
Where does that leave borrowers who resumed paying off their loans last year when the Supreme Court ruled?
So most borrowers right now are still paying their loans as they would at any other time. Since the pandemic pause ended last October, those payments have resumed for most borrowers.
This week, millions of borrowers got an email from the White House and President Biden about this topic. What did Biden say in the email?
That email essentially was just to update borrowers that the administration is still working on the plan, still hoping to finalize the plan before the November election this year, and essentially just let borrowers know that it's still a top priority of the administration.
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