2023 is Coming and the Big Questions about Student Debt Still Loom

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2023 Is Here -- And the Big Questions about Student Debt Loom
As 2023 progresses, major concerns remain about new repayment plans, debt cancellation, bankruptcy rules and more.
By Eliza Haverstock Lead Writer | Student loan repayment, college alternatives Eliza Haverstock is a lead writer on the NerdWallet's student loans team, which focuses on loan repayment as well as alternatives in lieu of traditional bachelor's degrees. In the past, she covered billionaires and investing, personal finances and fraud in fintech for Forbes in New York, and she also covered private markets for PitchBook in Seattle. Eliza began her career at her college newspaper at the University of Virginia and interned for Bloomberg which she then spent a summer writing a feature story on plastic straws. She lives within Washington, D.C.





January 4, 2023


Editor: Karen Gaudette Brewer Assigning Editor Public policy, student loans Karen Gaudette Brewer joined NerdWallet with 20 years of journalism experience, including working in newsrooms and leading editorial teams. She was most recently as the executive editor of HealthCentral. Her journalism career began with The Associated Press and later worked for the (Riverside) Press-Enterprise, The Seattle Times, PCC Community Markets and Allrecipes.com. She has had her writing recognized by the Society for Features Journalism and the Society of Professional Journalists. She has written two books on her experiences in the Pacific Northwest.







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From the introduction of new repayment policies to a massive one-time debt forgiveness policy, 2022 proved to be an eventful one for student loans.
But there are still questions about students' loan announcements, and answers are not plentiful and scarce. We're not sure of what, when, or if certain changes are going to take form.
As 2023 dawns in 2023, here are the top concerns about the issue of student loans in the coming year -- as well as how students can do to be prepared amid the uncertainty.
Is student debt cancellation still happening?
Lawsuits have paused the rollout of President Biden's program for qualified applicants and for $20,000 for Pell Grant applicants. Though the loans of 16 million have been approved to participate in the program, they won't see any debt forgiven unless the White House succeeds in court.
In the meantime, borrowers need to put aside funds to cover the cost of repaying their entire student loan and avoid taking on unnecessary expenses, says Scott Buchanan, executive director of the Student Loan Servicing Alliance.
"If you are able to get loan forgiveness happens and you are eligible, then you'll be able to enjoy a boost in some respects and extra cash can be used to pay for various other costs," He says.
>> MORE:
When will forbearance end?
The expiration date of forbearance -- which is the free of interest on the student loan payments that started in March 2020 depends on the legal consequences from Biden's debt-relief program.
We don't know when it will end under the latest guidelines. In November, there was a change in the White House . Repayment is now scheduled to be resumed 60 days after lawsuits challenging the broad debt forgiveness program are settled or 60 days after July 30, 2023or when it is the first.
This means that the interest-free pause could last until August, if not earlier, but borrowers should prepare to start paying back loans earlier. In the meantime, the Supreme Court will hear oral arguments in February, and an urgent decision likely to follow, in the case of the lawsuits that have blocked implementation of Biden's debt-relief plan.
What is the deadline to sign-up to the income-driven repayment program?
In the event that the White House announced the $10,000-per-borrower student debt forgiveness program in August, it announced a program that received less attention, but could benefit countless borrowers in the long term: a brand new income-driven repayment plan option. The White House said the new plan will set monthly payments on students with undergraduate loans at "5 percent of the borrowing person's income discretionary," just half that of current IDR plans.
There's no specific time frame for when the borrowers will be able to sign up. We don't yet know exactly how the new IDR plan will appear in the final version, who will be eligible, and when applications are expected to open. The draft rules for the plan could be released within the next six months or even six months from now according to Betsy Mayotte, president and the founder of The Institute of Student Loan Advisors.
"The draft rules could change significantly from draft to final, however, we'll be able to get more information about what this new IDR plan will be like when we receive the draft plan," Mayotte adds. Mayotte.
>> MORE:
Can I discharge my student loans in bankruptcy now?
In bankruptcy, people have long had the option of requesting that the student loan debt be wiped away but this has typically been much more difficult than releasing other consumer debts , like credit card and medical bills. This is because the borrowers needed to prove to a judge that the student loan was a source of hardship, which is a difficult test for relief.
This changed in November as both the Departments of Justice and Education jointly released the new guidelines that aimed to uniformize how to define "undue difficulty." A bankruptcy judge is still able to decide on the final outcome of each case.
"Today's guidance offers a better and more fair, transparent process for student loan customers who have filed for bankruptcy" declared Vanita Gupta, associate attorney general at the Justice Department, in a press release.
Borrowers can file bankruptcy cases with the new guidelines but Stanley Tate, an attorney who specializes in student loans and borrowers, suggests that those who have been paying for at least 20 years consider abstaining until the funds are applied on their account in the month of July prior to taking any action. (The White House unveiled the one-time IDR waiver in a separate announcement from the proposed new IDR plan, on April 20, 2022. The waiver will be counted every month you've spent in repayment or on pause since leaving school toward forgiveness, moving some students closer to crossing the line.)
"It could happen that your loan will be wiped clean automatically ... so there's no reason to go through the bankruptcy option," says Tate.
What's happening with the Joint Consolidation Loan Separation Act?
In October, Biden announced in October, Biden signed the Joint Consolidation Loan Separation Act into law. It will allow those who had previously consolidated their student loans with a spouse -in a program that was in operation from 1993 until 2006 . separate the debts. Additionally, borrowers with consolidated spousal loans to avail benefits, such as the Public Service Loan Forgiveness when they have separated their debt.
For those who have consolidation loans This new law will provide "freedom from domestic and financial abuse, the freedom to manage their financial destiny as well as the right of enjoying the exact rights that other borrowers throughout the country," said Sen. Mark Warner (D-Va.) the bill's sponsor in an announcement to the press.
It is estimated that the Education Department holds at least 13,000 joint consolidation loans according the Warner's Office. But, we don't know how long it will take for the new law to be fully implemented, or what the process for applying will look like, or what documents it will require.
Subscribe to emails announcements from the Education Department about how and when to apply.


About the author: Eliza Haverstock is a lead writer on NerdWallet's student loan team covering loan repayment and alternatives to traditional four-year degrees.







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