On June 30, 2023, the U.S. Supreme Court formally blocked President Biden’s use of emergency powers to cancel up to $20,000 for student loan borrowers whose income is less than $125,000 (or $250,000 for households). In response to the Supreme Court’s ruling, the Administration announced it would seek an alternative path to debt relief using the Secretary of Education’s authority under the Higher Education Act. The scope of a new plan and the timeline remain uncertain.
With monthly payments now set to resume in October, the Administration announced a more affordable repayment plan called SAVE and a 12-month "on-ramp" to repayment program, eliminating penalties for missed payments. Additionally, over 800,000 borrowers just had loans forgiven as a result of fixes to income driven repayment plans, representing a total of $39 Billion in automatic loan forgiveness.
According to the Student Borrower Protection Center, nearly one in seven adults in San Francisco (13.2%) have student loan debt. More than 92,000 borrowers owe a total of $4.2 billion; the average student debt balance is $45,240. The student debt crisis is impacting neighborhoods unevenly, with communities of color and poorer neighborhoods paying the heaviest price. For local student borrowers and their families, all the recent news can be understandably bewildering.
If you are a student borrower wondering where to begin, here are a few simple steps to help you prepare:
1. Make sure your contact information is current with the Department of Education and your loan servicer. To find out who your loan servicer is, visit your account dashboard at studentaid.gov and scroll down to the “My Loan Servicers” section. Updating your contact information will ensure you don’t miss communications, billing statements, and due dates.
2. See if you can enroll in the new SAVE repayment plan and lower your monthly payments. The newly announced Saving on a Valuable Education (SAVE) plan is the most affordable repayment plan that has ever been offered. You can compare repayment plans and get an idea of what your monthly payment will be by using studentaid.gov’s Loan Simulator calculator.
3. Find out your eligibility for additional relief programs. There are a variety of relief programs available to support student borrowers. Check out studentaid.gov for your eligibility for other pathways to student loan cancellation such as Fresh Start and Public Service Loan Forgiveness programs.
4. Get help! Studentaid.gov and the CA Department of Financial Protection and Innovation are trusted sources of up-to-date information or tackle your unique situation with the help of a financial coach, make a free appointment with OFE’s Smart Money Coaching program. Finally, beware of student loan related scams-enrolling in all Federal student loan relief programs is free and available through self-service or your loan servicer. Learn more about scams and file complaints with DFPI.
