With the U.S. Supreme Court weighing the fate of President Biden’s landmark student debt relief program, financial advisor clients with outstanding college loans may wonder what to do in the meantime with money they’d otherwise use for those monthly payments.
The debt relief plan, being challenged by Republican-led six states and two individuals, promises to forgive up to $10,000 in Department of Education loans for eligible borrowers — and potentially double that for those who received Pell Grants.
Individuals must earn less than $125,000 a year, and married couples less than $250,000, to qualify for the relief, which could affect as many as 43 million borrowers. The White House estimates that nearly 20 million people could see their entire remaining student debt balances erased.
As the Biden administration announced in January, 26 million people had either applied for debt relief or provided sufficient information to the Department of Education to be deemed eligible for relief since the program was announced last year.
While the department had approved more than 16 million applications and sent them to loan servicers, lawsuits challenging the program forced the government to stop accepting applications and prevented loan services from discharging the debts.
Experts reportedly expect the court, which recently heard oral arguments on the program, to issue an opinion by late June.
During the height of the COVID-19 pandemic, the government paused federal student loan payments, placed the college debt interest rate at 0% and stopped collections on defaulted loans. It has extended that pause until the litigation is resolved or the department is permitted to implement the new relief program.
If the debt relief program hasn’t started, and the lawsuits haven’t been resolved by June 30, payments would resume 60 days later, according to the department.
In addition to the Supreme Court challenges, Biden’s plan faces opposition in Congress, where one lawmaker has introduced legislation to prohibit mass student loan cancellation.
We recently asked advisors: As the Supreme Court considers President Biden’s student debt relief plan, what advice are you giving clients who have outstanding college loans?
Check the gallery to see answers from nine advisors. (Some answers may be lightly edited for length or clarity.)