Supreme Court rejects student loan forgiveness plan

image of concerned woman on the phone, with her student loan bill in handImage: image of concerned woman on the phone, with her student loan bill in hand
Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

The U.S. Supreme Court has rejected President Biden’s student loan forgiveness plan, dashing the hopes of millions of Americans that it would wipe out all — or at least some — of their federal student loan debt.

Nearly 45% of student loan borrowers — about 19 million people — would have had their federal student loan debt fully canceled under the plan.

The Supreme Court decision came just weeks after Biden signed a debt-ceiling law that contained provision to end a three-year, interest-free payment pause on student loans. With the end of pandemic-related relief, interest on federal student loans will begin accruing in September and payments will resume in October.

Key takeaway: The Supreme Court has struck down President Biden’s loan forgiveness plan. To get ready for the restart of payments in October, take a look at our student loan resource page to explore options.

Student loan relief explained

About 43 million borrowers hold more than $1.6 trillion in student loan debt. Before Biden’s plan was put on hold, about 26 million people applied for debt relief and 16 million applications were approved, the White House said.

What to know

  • Key benefits — Biden’s executive order would have eliminated $10,000 in debt for individuals earning less than $125,000 a year (or for married couples earning less than $250,000 who file jointly) and $20,000 for those who received Pell grants.
  • Why it failed The Supreme Court ruling said the Biden administration didn’t have the authority to enact the broad debt-forgiveness plan as part of the COVID-19 emergency.
  • Price tag The program would have cost about $400 billion over the next 30 years, according to the Congressional Budget Office.

Preparing for student loan repayments

With the moratorium on student loan repayments ending, now is the time to revisit your finances and prepare for making payments again.

What you can do

  • Contact your servicer. Your loan servicer can discuss options with you and help you stay in good standing with your loans. If you’re uncertain who services your student loan, you can find out with this Federal Student Aid resource.
  • Verify payment info. When reviewing your loan information, make sure your address and other contact info is up to date.
  • Make a plan. If you can, start making room in your budget for the restart of loan payments. If you think you’ll have trouble making payments, you can explore repayment options, including income-driven repayment plans. Check out the loan simulator tool at to see which option best meets your needs.
  • Consolidate your loans. Federal student loan holders can apply for a direct consolidation loan, which combines your student loans into one from a single lender and one monthly payment.
  • Consider Fresh Start. Under the Department of Education’s Fresh Start program, borrowers with defaulted student loans can opt to resume payments with their loans in good standing.
  • Look into deferment or forbearance. Under certain circumstances, you may be able to defer your federal loans for up to three years. If you don’t qualify for deferment, you may be eligible for forbearance, which can postpone or reduce your payments for up to 12 months.

About the author: Brad Hanson is a senior editor at Credit Karma. His 30 years of experience in print and digital media includes work for the Los Angeles Times-Washington Post News Service, and Polyvore. Most recently before… Read more.