Is More Student Loan Relief Coming?

Last June, when the Supreme Court struck down a Biden administration plan to forgive federal student loan debt for qualified borrowers, the White House said it would continue to push for loan forgiveness.

And it has.

In a series of smaller initiatives since that ruling, the Department of Education has canceled federal student loans for nearly 3.9 million borrowers, effectively wiping out more than $135 billion in loan debt.

The recipients to date have mostly been people enrolled in special repayment programs, such as the Public Service Loan Repayment Program, and Income-Driven Repayment plans.

If you have federal student loan debt, or love someone who does, I want everyone to know that there will be more borrowers getting relief in the coming months through the administration’s SAVE plan. I encourage you to learn about the various SAVE plan initiatives of this federal forgiveness plan and determine if you should apply for relief.

The administration is also working on changes to Department of Education regulations that would enable an even bigger and broader loan forgiveness program. As with all federal rulemaking, the process takes time. But just a few weeks ago the administration advanced the ball with the release of a new proposal for changes to existing rules that would allow more debt relief, and the Department of Education is working on negotiating changes with various stakeholders.

In sum, somewhat quietly, nearly 4 million borrowers have had federal student loans forgiven in less than two years, and there is still a lot of effort being put into expanding the relief to even more borrowers.

If you have already received relief or are expecting that you may be eligible in the coming months, I hope you will be strategic in how you deal with this relief.

Having your debt forgiven, or your payments reduced is indeed a big financial win. But it’s also possible to leverage that bit of financial good news into even more financial good news, by making the most of the money you’re no longer obligated to use to pay off student debt.

I encourage you to assign a specific new use to the monthly money you no longer have to put toward student debt repayment. If you had a $150 monthly payment wiped out, where is that $150 now going? If you had your payment reduced by $75 a month, what might you do with that $75?

Perhaps it is more money to cover life’s essentials, such as not sweating the rent, utilities, or groceries. But if you have those “needs” covered, I want you to think about consciously earmarking money no longer needed for student debt payments, for a financial goal that will make you feel stronger and more secure.

It’s up to you to decide what your goal or goals will be. All I insist on is that you be intentional. If you want to build up your emergency savings, set up an automatic monthly deposit into your account. If you want to chip away at a credit card balance, set up an automated monthly payment that is larger than what you’re paying now. If you want to save for a home down payment, create a separate savings account for that goal and set up an automated monthly deposit from your checking account.

What I don’t want you to do is nothing. If you don’t have a clear plan it increases the odds the money gets spent on wants or is just frittered away. That doesn’t make the grade with me.