Debt Ceiling Bill Leaves Student Loan Forgiveness Intact

Debt Ceiling Bill Leaves Student Loan Forgiveness Intact

Biden Keeps Student Loan Forgiveness Progress Amid Debt Ceiling Talks

After months of pushing to limit the Biden Administration’s progress on federal student loan forgiveness, Congress has failed to make any significant changes in the latest debt ceiling bill. The “Fiscal Responsibility Act of 2023,” which the President signed into law earlier in June, leaves a number of Presidential programs intact, offering stability for borrowers and avoiding the potentially “catastrophic” consequences of repeal

Presidential Student Loan Forgiveness Moves Forward, but Payments Will Resume

One key target was President Biden’s promise to forgive between $10k-20k in federal student loans for every borrower who falls below a certain income threshold. While Congress still appears to be pushing another bill to stop loan forgiveness, it is more likely that the issue will be settled by the Supreme Court. That bill also seeks to reverse the most recent extension of the student loan emergency forbearance begun in March of 2020, but the President has promised to veto, if it passes. Instead, the forbearance will expire on August 31st, as originally announced and now codified by the debt ceiling bill. 

Other Student Loan Reforms Untouched by Debt Ceiling Bill

Other than cementing the end of the payment freeze, the debt ceiling bill has little effect on ongoing student loan reform undertaken by the Biden Administration. Programs like the revised Income Driven Repayment (IDR) plans, Limited Waiver Opportunity for PSLF, and IDR Account Adjustment proceed as planned. While the passing of “Fiscal Responsibility Act of 2023” doesn’t foreclose the possibility that Congress may attempt to meddle in student loan forgiveness in the future, it takes away a significant bargaining chip they had hoped to leverage against it.

If you have Federal Student Loans, schedule your free 15-minute Discovery Session to find out if your loans can be forgiven after 25 years.