Breaking News
More () »

Even without student loan relief, many borrowers are about to benefit big from a rule change

After the Supreme Court canceled the president’s blanket forgiveness plan, new options and a new law may help

DALLAS — President Biden announced last summer that his administration was forgiving $10,000 of federal student loan debt for each qualifying borrower. But that plan hit a big pause. Some Republican-led states challenged the president’s loan forgiveness actions in court.

The battle went all the way to the U.S. Supreme Court, which last week took the paused plans to a full stop; ruling that the Biden Administration didn’t have the authority to wipe away all that debt.

A lot of borrowers had been keeping an eye on that case. But 2,315,080 eyes here in Texas may have been especially focused on the high court. That is because as we reported last year, one estimate showed that half that number (1,157,540 Texans) would have had their entire student loan balances erased with $10,000 in loan forgiveness.

The Biden Administration trying other approaches to student debt relief

So, where to from here? Instead of blanket forgiveness, the president has announced his administration will take a more time-consuming, targeted approach to identify alternative debt relief options for borrowers.

Studentaid.gov, an official government office of the U.S. Department of Education, has a banner that reads: “The Supreme Court issued a decision blocking us from moving forward with our one-time student debt relief plan. Visit StudentAid.gov/debtrelief to learn more about the actions President Biden announced following the decision and find out how this decision impacts you.”

There is an option where borrowers can apply for an income-driven repayment plan. Also, if you are one of the millions of student loan borrowers in default, you have the chance to get out of default, get that blemish removed from your credit report, and go back onto a payment plan. The plan is called Fresh Start.

Following multiple pandemic pauses, monthly student loan payments are set to resume this October. Talk to your servicer now to verify that your servicer hasn’t changed in these past few years. Also, make sure your account information is all correct, because the phone lines and possibly the websites of loan servicers are likely to be inundated as repayments resume.

Big benefit coming for many with student loan debt

As you are paying back your loan, don’t forget to pay future you. Make sure you contribute to your retirement plan if your employer offers that. You might be thinking that it’s one or the other: Either you pay your student loans, or you put money into retirement.

But you may be able to do both, starting next year. As we have previously reported, 2024 brings a major new benefit for millions of Americans. Normally, to receive matching retirement account contributions from your employer, you must contribute to your retirement plan first.

But the Secure 2.0 Act changes that. Starting in 2024, if you are paying on student loans, your employer can make matching payments to your 401(k) or 403(b) or similar plans based just on your loan payments. Talk to your benefits manager about that.

Before You Leave, Check This Out