The Carnegie Mellon University campus. (Photo by Jay Manning/ PublicSource)
Borrowers haven’t had to make payments on their federal loans for more than three years. Now, their payments are resuming in October without the hoped-for cushion of forgiveness.
by Emma Folts, PublicSource
Nearly 80,000 borrowers in Southwestern Pennsylvania lost their opportunity for student loan forgiveness Friday, when the U.S. Supreme Court struck down President Joe Biden’s plan to wipe away billions in federal debt.
The plan, which the Biden administration announced in August 2022, could’ve forgiven up to $20,000 in federal student loan debt for more than 40 million individual borrowers. The plan was estimated to cost more than $400 billion over 30 years.
Borrowers were able to apply for forgiveness from October to November 2022, when the Biden administration stopped taking applications after a federal judge in Texas deemed the plan unlawful. About two-thirds of eligible people in Pennsylvania’s 12th congressional district, which includes Pittsburgh and parts of Allegheny and Westmoreland counties, applied during that time.
Monthly payments on federal student loans are set to resume in October. It’s a bill that millions haven’t paid for more than three years, since the federal government first suspended payments due to the pandemic. The federal Department of Education had said the number of borrowers in default could spike significantly if the court were to strike down Biden’s plan.
The ruling “threatens the financial security of millions of low-income Americans who are struggling with unaffordable student loan debt,” said Abby Shafroth, co-director of advocacy at the National Consumer Law Center, in a press release.
This spring, PublicSource spoke with several Pittsburgh college students and graduates about what student loan forgiveness would mean for them. One borrower said the weight of his debt seemed to “slowing everything down,” and that his debt partly led him to put off his dream of going to nursing school.
First-generation college student Paloma Del Toro was counting on having all of her expected student loan debt wiped away under Biden’s plan. Without relief, she said she may need to move back home to Illinois and pursue employment in a less-desired field.
“I don’t really have much to fall back on,” said Del Toro, who attends Carnegie Mellon University. Her family doesn’t “have that type of money to be paying these loans right off the bat when we graduate.”
The court ruled that the forgiveness plan lacked explicit authorization from Congress and was, therefore, an overstep of presidential power. Lawyers for the Biden administration had argued that the 2003 Higher Education Relief Opportunities for Students Act, or HEROES Act, permitted such debt relief. The court considered two cases on the issue, dismissing one and splitting 6-3 on the other, with the three liberal justices dissenting.