Will student loan payments actually resume in January?

Legal action blocking forgiveness could impact start date
White House DC
Posted at 3:00 AM, Nov 17, 2022

WASHINGTON — There is a pretty good chance you or a loved one have questions involving federal student loans right now.

Will forgiveness actually happen? Will student loan payments begin in January as planned?


It's no secret that learning is expensive.

In fact, $29,719 was the total amount, on average, college graduates who took out loans last year borrowed.

President Joe Biden had plans to erase some of that debt with a recent executive order.

His plan calls for $10,000 to be forgiven for most Americans who make under $125,000 per year.

Up to $20,000 would be forgiven for recipients of a Pell Grant.

However, the actual erasing of student debt by Biden hasn't gone as smoothly as he would have liked.

In fact, the entire program is on hold right now creating questions for millions of Americans.

First off, you need to know that six states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — have filed a lawsuit to block forgiveness.

In court documents, leaders in those states have argued the president can't do it.

So far, they've convinced the courts they are right.

Missouri, for instance, has argued that the Missouri Higher Education Loan Authority, which services many federal loans, will lose money if forgiveness happens, indirectly impacting tax revenues in states.

The 8th Circuit Court of Appeals has agreed writing that forgiveness "presents a threatened financial harm to the State of Missouri."

The 8th Circuit's current ruling, as well as separate legal challenges, is why if you go to right now you receive an urgent message informing you that you can't apply for any forgiveness.

As for what happens next, the Biden administration is appealing to the United States Supreme Court.

Lawyers representing the White House will argue Biden can legally issue forgiveness.

Lawyers are first fighting to end an injunction. They will likely soon argue for justices to take up the case entirely.


Needless to say, all of this is going to take time, perhaps months, which is putting an increased focus on the calendar.

Remember, January 1st is when federal student loan payments are set to begin for the first time since March 2020.

Biden said there would be no more extensions.

However, in the last few days that has become less certain with the possibility emerging that payments could be delayed again while the legal debate continues.

Many student advocacy groups are actively lobbying for another delay.

So for now, the reality is that federal student loan payments as well as forgiveness remain in limbo.

Debt cancelation would cost taxpayers around $400 billion according to estimates from Congress.