The Supreme Court killed student loan debt forgiveness. Now what?

A key route for having all or some of your student loan debt erased was blocked Friday by the Supreme Court.

The ruling, disheartening for millions of people who would have been eligible for loan forgiveness, kills President Joe Biden’s sweeping plan for cutting student debt. So far, the administration hasn’t said if it has an alternative plan for mass student loan forgiveness, but a White House official said after the ruling that “the president will have a lot more to say today” and “he’s not done fighting yet.”

Borrowers can still turn to smaller options for relief that are unaffected by the decision, however, including others expanded with less discord in the Biden administration. And several state-level options are even offered by some of the very places whose challenges helped dismantle Biden’s plan.

There are options for public service workers, people who have been misled by their colleges or whose institutions closed, as well as plans to cut monthly payments based on borrowers’ income. Consistent payment over time can lead to shedding the remainder of a balance in the long run. Some programs are just for teachers and health care workers or veterinarians. Others target people who commit to living in rural parts of the country.

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Federal loan forgiveness plans still standing

An easier path for public sector workers: The Public Service Loan Forgiveness program, created in 2007, sounds simple: For people who give up high-paying private sector jobs and work in a public sector job for 10 years while paying down their student loan debt, the federal government erases whatever’s left once the decade is up. But before the current administration, only 7,000 people had loans forgiven this way. The Biden administration temporarily changed the Public Service Loan Forgiveness program to ease some of the red tape. That translated into billions in student loans forgiven for more than 373,000 people, and some of those changes will become permanent, so more borrowers will qualify to have their debt wiped out.
Simplifying rules for borrowers with disabilities: Also this year, some of the bureaucracy involved in discharging federal student loans for borrowers considered totally and permanently disabled will ease. One change eliminates checking these borrowers’ incomes every few years. These and other adjustments to rules for borrowers with disabilities are expected to erase outstanding balances worth billions.
Cutting the size of monthly payments and forgiving a greater share of debt in the long run: A proposal from the White House, expected to take effect next year, would address student loan payments, interest on payments and other aspects of how repaying loans work for people using a so-called income-driven repayment plan. Pretty much every federal student loan is eligible for one of these plans. Among other things, the changes would mean cutting in half the amount borrowers have to pay each month on undergraduate loans from 10% to 5% of discretionary income. It would also raise the amount of income considered nondiscretionary, which means it is protected from being factored in to how much people have to repay. That guarantees that borrowers earning under 225% of the federal poverty level – that’s about what a person making $15 an hour makes in a year – will not have to make monthly payments. And loan balances would be forgiven after 10 years of payments, instead of 20 years, for borrowers whose original loan balance was $12,000 or less. The federal Education Department predicts this change means nearly all community college borrowers would be debt-free within 10 years.
Changes for people whose colleges mislead or close suddenly: New Biden-era rules that take effect later this year are intended to make it easier for borrowers to erase their debt when universities mislead them about the quality of their programs or unexpectedly close. In the past, borrowers had to apply for relief through the so-called borrower defense rule. The time-intensive, bureaucratic process left many with debt and incomplete or worthless degrees. As of January, about 465,000 applications were pending under that rule. The new rules also will ban institutions from requiring students to sign non-arbitration clauses and allow legal services groups to take on their cases in class-action suits.
Easing hurdles to shedding debt by declaring bankruptcy: Although this has long been an option, it’s also been nearly impossible to do in reality, but that’s changing. In November, the Education Department and Department of Justice made it easier for those with student debt to discharge their obligations via bankruptcy.

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Together, these programs already have led to billions in forgiven student loan debt and could erase billions more. They are intended to be long-term changes rather than a one-time fix, although none address something the federal government has little power to control: the cost of tuition, housing and other expenses that lead students to run up eye-popping sums of debt in the first place.

Republicans in recent months, however, have raised questions about some of the Biden initiatives, including changes to income-driven repayment. On Wednesday, Senate Republicans introduced five bills related to higher education and student loans, including one that would condense nine different student loan repayment options.

At the opposite end of the political spectrum, Sen. Bernie Sanders, I-Vermont, introduced a bill that would make community college cost-free for all students and eliminate tuition and fees at four-year institutions for lower-income Americans.

State-based plans for student loan debt forgiveness

Nearly every state has its own student loan forgiveness plan, and many have more than one. Each program differs, but most are narrowly tailored to a single industry or profession, such as medicine, teaching, law enforcement, farming or for working in places with a dire need for their services. Some require working in a job for a required length of time.

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States with these programs include the Republican strongholds of Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina, which sued the Biden administration over student loan debt forgiveness, claiming the president overstepped his authority.

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A few examples:

Arkansas: Teachers who work in a part of the state where there is a shortage of teachers, or take on a topic for which teachers are in short supply, are eligible for loan repayment. The program pays up to $6,000.
California: The state has a program that repays the loan debt of primary care doctors, dentists, nurse practitioners, pharmacists, mental/behavioral health providers and an array of other health care workers who work in federally designated California Health Professional Shortage Areas.
Florida: The state has at least two programs that forgive student loan debt, including one for nurses and another for lawyers.
Maryland: One of the state’s programs helps pay down loan balances for residents who provide public service in state or local government or in Maryland nonprofit agencies helping low-income or underserved residents. It applies to some lawyers, some nurses, many teachers and other professions. Another Maryland program helps dentists who treat the state’s most vulnerable populations.
Missouri: For dentists, doctors and others working in the medical field who train in Missouri and then go to work in a part of the state that is considered underserved, the state will repay a portion of student loans.
Nebraska: The state will repay up to $200,000 for people working in medicine and dentistry.