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Student Loan Debt Relief: What Will Happen?

In less than 30 days, on February 28th, the Supreme Court will hear oral arguments on whether or not the Student Loan Debt relief package is legal or not. As of today, there seems to be a very good chance the conservative Supreme Court will strike down the proposed debt relief. This would deal a major blow to millions of American's waiting and hoping for all or a portion of their Student Debt to be forgiven.

Quick Recap

Who is Eligible for Relief?

  • To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households). 

  • If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt relief. 

  • If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt relief.  

What does the “up to” in “up to $20,000” or “up to $10,000” mean? 

  • Your relief is capped at the amount of your outstanding debt.

  • For example: If you are eligible for $20,000 in debt relief, but have a balance of $15,000 remaining, you will only receive $15,000 in relief.  

What Options Remain?

If the Supreme Court were to determine the debt relief to be illegal, President Biden could use a different law known as the Higher Education Act of 1965, which states the Education Department can “enforce, pay, compromise, waive, or release any right, title, claim, or lien related to federal student loans."

Experts believe the Biden Administration should have used the Higher Education Act of 1965 to start. Currently the Biden administration is using the Heroes Act of 2003 to argue it has the authority to cancel student loan debt.

The pandemic-era relief policy pausing federal student loan payments has been in effect since March 2020, and payments aren’t scheduled to resume until after the litigation over the president’s plan is resolved or at the end of August — whichever comes sooner.


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