Student Loan Forgiveness on Hold Again. Experts Explain What's Next for Debt Relief

Not even a full day after the Biden administration's student loan forgiveness plan was given the green light, a Missouri judge blocked the plan again. If you have student loan debt, experts say to expect a bumpy ride while this plan is battled out in court.

Student loan forgiveness programs and repayment plans have ping-ponged through the courts all year, leaving borrowers with whiplash and uncertainty about what comes next.

I talked to two student loan experts to unpack what's happening with student loan debt relief plans and help you plan for all possible outcomes.

Read more: Harris vs. Trump on Student Loans: Experts Weigh In on Both Candidates' Student Loan Plans

What is Biden's student loan forgiveness plan?

In April, the Biden administration announced a second attempt at broad student loan forgiveness, a plan that would offer relief to more than 25 million borrowers. Experts refer to the White House's "Plan B" for broad forgiveness, since the Supreme Court shot down its first plan in 2023.

You might be eligible for relief through this plan if:

• Your federal student debt exceeds the amount you initially borrowed, after interest. 
• Your federal student loan is older than 20 or 25 years.
• Your trade school degree resulted in large amounts of federal student debt or low earnings.
• You're eligible for a federal forgiveness program but haven't applied.
• Your federal student loan has accrued $20,000 in interest, or you're a single borrower earning less than $120,000 (under $240,000 for married filers) and are enrolled in an income-driven repayment plan.

This plan is expected to be finalized in the fall. To prepare, the Department of Education emailed borrowers in August, letting them know that they might be eligible for this new plan and giving them a month to opt out if they didn't want to receive forgiveness. 

Why is the 'Plan B' student loan forgiveness plan on hold?

In September, Republicans petitioned a federal court in Georgia to place this student loan plan on hold. Though the courts generally wouldn't put a plan on hold before it's finalized, Mark Kantrowitz, a student loan and financial aid expert, explained to CNET in September that there were concerns that the Department of Education planned to grant forgiveness as soon as the rule went live. Typically there's a 60-day review period after a rule goes live before it can be acted on.

As a result, the Georgia court placed a temporary restraining order on this debt relief plan in September, blocking forgiveness efforts. On Oct. 2, the court ruled to let the restraining order expire on Oct. 3, and transferred the case to a federal court in Missouri.

Republican-led states quickly petitioned to have the plan blocked again. Late in the evening on Oct. 3, US District Judge Matthew Schlep granted a preliminary injunction against the student loan debt relief plan, placing it back on hold until a final court decision is made.

What about SAVE? Is it still on hold?

The Biden administration's Saving on a Valuable Education program, or SAVE, has been on hold for months.

SAVE is an income-driven repayment plan, or IDR, that was first launched in 2023. Among IDRs, it offers some of the best student loan benefits for borrowers, including low monthly payments. Another perk of SAVE is the ability to earn debt relief after paying off debt for 10 to 25 years. 

This repayment and debt relief plan is on hold, pending two final court verdicts, and may make its way to the Supreme Court for a final decision. If you're enrolled in SAVE, your payments are on hold until the legal challenges are resolved. 

Is there anything borrowers can do to prepare?

Right now Elaine Rubin, a student loan and policy expert with Edvisors, suggests preparing for all repayment scenarios.

"While both broad forgiveness and the SAVE Plan are at risk, borrowers should understand the monthly costs to repay their debt," Rubin said.

If your payments are currently on hold, reviewing your balance and using the payment calculators on the StudentAid.gov site is a good place to start. Rubin suggests planning on repaying your loans until they're paid off in full, just in case either plan is shot down by the courts.

"Borrowers should not make decisions based on the expectation of forgiveness. Even if forgiveness is approved, not all borrowers will qualify for forgiveness," Rubin said.

There's one exception. If you're eligible for forgiveness through a program like Public Student Loan Forgiveness and you're enrolled in SAVE, you may want to apply for another income-driven repayment plan to get forgiveness sooner. You'll need to fill out the online PDF and submit it to your borrower. Expect this process to take several months. 

Kantrowitz added that there's not much for borrowers to do while these cases make their way through the courts. Expect final court rulings and likely appeals cases in the coming months. When a ruling is finalized, expect an update from the Department of Education explaining your options.

Read more: My Student Loan Payments Are Paused Due to SAVE's Legal Challenges. Here's Why