What Borrowers Need to Know After the Biden Administration Closed Its Student Loan Forgiveness Application

A photo to accompany a story about student loan news Samuel Corum/Bloomberg via Getty Images
The Biden administration stopped accepting applications for student loan forgiveness on Friday, Nov. 11, after a federal judge in Texas ruled his plan unconstitutional.
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A federal judge in Texas ruled Thursday that President Joe Biden’s student loan forgiveness plan is illegal, prompting the Department of Education on Friday to stop accepting applications for student loan forgiveness.

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The Department of Justice immediately appealed the decision to the 5th US Circuit Court of Appeals, so the case must play out in court before the administration can cancel any federal student loan debt. The 8th US Circuit Court of Appeals also temporarily blocked Biden’s debt relief plan in recent weeks. These two lawsuits, like several others, argue that Biden lacks the authority to grant widespread forgiveness for borrowers. 

While it’s still possible for borrowers to receive forgiveness before the end of the year, it’s not as likely given the multiple legal challenges, according to student loan expert Robert Farrington. “The courts could continue to delay while hearing these issues,” he says.

Screenshot of the Student Aid website as of Nov. 11.

First introduced in August, Biden’s plan promised to cancel up between $10,000 and $20,000 in federal student loans for individuals who earn less than $125,000 and married couples or heads of households who earn less than $250,000 annually. 

If you have federal student loans, you may be wondering what you should do in light of all this. Here’s what we know so far.

What Borrowers Can Do Amid the Legal Challenges Over Student Loan Forgiveness

Legal challenges are mounting for Biden’s student loan relief plan, but that doesn’t mean borrowers have to sit idly by during this period of uncertainty. Farrington says borrowers should plan to resume payments in January, and now’s a good time to begin preparing for that.

Start putting together a new budget that accounts for your student loan payments. It could be worth mapping out multiple versions of a future budget: a budget that accounts for debt relief and a budget that doesn’t. If the Biden administration can cancel federal student loan debt before year-end, you’ll likely need to adjust your monthly payment expectations. But until that happens, it’s best to prepare for the worst and hope for the best.

Farrington suggests taking advantage of the student loan payments pause to prioritize other aspects of your finances right now. Build up your emergency fund, pay down high-interest debt, and invest what you can. Those are better strategies for your money right now and will allow your money can go further, he says.

“It’s time to dust off that budget and make sure you’re feeling comfortable,” he says.

You should also sign up to receive notifications through the Department of Education to know when or if the student loan forgiveness application reopens.