Student Loan Forgiveness Decision- What the Supreme Court Ruling Means for You

The ruling from the Supreme Court comes following months of speculation about whether or not President Biden’s student loan forgiveness plan would move forward. February’s oral arguments left many borrowers uncertain about the future of his plans.

Today’s decision to rule against student loan forgiveness plans means that the 26 million applicants for forgiveness will now have to ensure that they can meet their required student loan repayments when they begin again in October.

Many of those who applied for forgiveness were no doubt hoping that forgiveness would substantially decrease the financial impact of having to find the extra money to begin to repay their loans again following forbearance. Some borrowers have already stated that they have no intention of resuming payments, saying that they can’t afford it, which if true, will lead to defaults, delinquencies, and ultimately, charge-offs. Regardless, borrowers will be being charged interest from September first which could lead to borrowers being in a much worse position.

For those who do resume payments, we can expect a resulting impact on consumer spending estimated to be $5 billion less a month according to a recent Investopedia article.       

This is likely to be a difficult time for borrowers and financial institutions- and a busy time for financial wellness providers. 

To help borrowers during this worrying time, we have launched our new product, Find My Servicer, and temporarily made it publically available to help borrowers take the first step toward finding their loan servicers and taking positive action toward managing their student loan debt. Find My Servicer is available free of charge to borrowers.

If you’d like to explore how you can support your customers with student loan debt guidance tools that will help them to manage their debt and reduce their likelihood of delinquency, Payitoff has developed a debt API and suite of student loan debt solutions including Find My Servicer with an array of integration options.