3 Considerations after the Recent Student Loan Forgiveness Update

Amanda H. Christensen, AFC

Update as of November 14, 2022

A federal judge in Texas ruled President Biden’s proposed student loan debt forgiveness plan illegal. This means borrowers no longer have access to the application and the forgiveness program is on hold indefinitely. While the Biden administration will appeal this decision, this process will extend the timeline and does not guarantee the decision will be overturned.

​What does this mean for someone who was planning to receive student loan forgiveness? Here are some important considerations while you wait for this process to play out.

1. Don’t splurge on holiday spending anticipating that you’ll not be paying your student loan payments come January. If you’re thinking you can afford some “temporary” credit card debt since you won’t have student loan debt, or as much student loan debt, come January, think again. I know this is hard. Most are not goo with delaying gratification - especially around the holidays. But you’ve got to have a future-thinking mindset in light of this new update.
2. Don’t take on new debt with the expectation that your student loan debt, or a portion of it, is going away. Simply said, don’t increase your current debt burden anticipating that your future debt burden will be lowered come January. 
3. Don’t expect the repayment pause to continue. Prepare for repayment in January. Adjust your spending now so you are ready to start making payments in January. It’s hard to believe that it’s been several years since people have been required to make payments on their student loans. How much will your monthly payment be in January? Can you pay yourself that amount in a separate savings account in November and December? Practice going without that income for a few months. Consider that you now have two months to get used to not spending that money on your discretionary expenses. Start setting it aside now as you’ll soon be required to pay your student loan bill, due every month beginning January 2023. Not sure where to start with budgeting? Sign up for a free personal finance webinar.

​We’ve got you! You’ve got this!