How Does the Rejection of Student Loan Forgiveness Affect You?

Editor’s note: In late June, the U.S. Supreme Court made two wide-reaching decisions relating to affirmative action and student loan forgiveness. This is part two of a two-part series covering those decisions.

On Friday, June 30th, the U.S. Supreme Court ruled along ideological lines to strike down the Biden Administration’s plan to provide student loan forgiveness for qualified borrowers. The decision will impact millions of borrowers across the country that were eligible for forgiveness as student loan repayments restart in the fall.


In August of 2022, the Biden Administration announced its plan for student loan forgiveness. The plan would have provided relief for federal student loan borrowers earning less than $125,000 annually, or $250,000 combined for married couples. Borrowers who received Pell Grants were to be eligible for $20,000 in loan forgiveness, while non-Pell Grant recipients were eligible for $10,000 in forgiveness.

The Biden Administration cited a 2003 law, known as the HEROES Act, as giving the Administration the authority to cancel student loan debt. However, soon after the Administration announced the plan, six states filed a lawsuit to block the plan. The Supreme Court ultimately ruled in favor of the suing states on a 6-3 vote, preventing the plan from taking effect and borrowers from receiving loan forgiveness.

Impact on Borrowers

An estimated 43 million borrowers were expecting to receive debt relief under the Biden Administration’s plan. With this Supreme Court decision, borrowers will be left to repay their entire remaining loan balances. The decision particularly burdens students of color – and especially Black students – who on average owe more in student loans than their white peers, per the National Center for Education Statistics and the Brookings Institute.

The decision coincides with the restarting of student loan repayments later this fall. At the onset of the pandemic, more than three years ago, the federal government paused all student loan repayments and the accrual of interest on those loans. However, loan repayments are set to resume this fall, on October 1, 2023, and interest will begin accruing on September 1.

The Road Ahead

In conjunction with the Supreme Court ruling, the Biden Administration announced that it will continue to pursue debt relieve via other means. The U.S. Department of Education initiated the process for regulations “aimed at opening an alternative path to debt relief for as many borrowers as possible,” but the timeline and exact shape for debt forgiveness via this process is unclear at this time. The Biden Administration also unveiled its new student loan repayment plan – known as the Saving on a Valuable Education (SAVE) plan – which is an income-driven repayment plan for borrowers that will forgive loan balances after 10 years of payments.