2023 Is Here and the Big Questions about Student Debt loom

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2023 is Coming -- and the Big Questions about Student Debt Still Loom
As 2023 progresses, major concerns remain about new repayment plans as well as bankruptcy rules and more.
By Eliza Haverstock Lead Writer | Student loan repayment and college alternatives Eliza Haverstock is a lead writer on NerdWallet's student loans team, which concentrates on loan repayment as well as alternatives to traditional four-year degrees. She previously covered billionaires, investing, personal finance and fintech fraud for Forbes and Forbes.com in New York, and she also covered private markets for PitchBook in Seattle. Eliza began her career at their college paper at University of Virginia and interned for Bloomberg, where she spent the time writing an op-ed story about straws made from plastic. She is based at Washington, D.C.





Jan 4, 2023


Written by Karen Gaudette Brewer Assigning Editor Public policy Student loans Karen Gaudette Brewer joined NerdWallet with over 20 years of experience in newsrooms as well as managing editorial teams. She was most recently as executive editor of HealthCentral. Her journalism career began at The Associated Press and later worked for the (Riverside) Press-Enterprise, The Seattle Times, PCC Community Markets and Allrecipes.com. Her writing has been recognized by the Society for Features Journalism and the Society of Professional Journalists. She's written two books about the Pacific Northwest.







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From changes to repayment policies to a sweeping single-time debt forgiveness program, 2022 proved to be an extremely prominent year for student loans.
But questions have clouded some of the loan news, while responses are few and far between. We're not sure of how, when or if certain changes are going to take form.
As 2023 dawns with the dawn of 2023, here are the most pressing questions about the issue of student loans -- and what students can do to be prepared in the face of uncertainty.
Is student debt cancellation still happening?
The rollout of the plan has been halted due to legal issues. of President Biden's for qualifying applicants and for $20,000 for Pell Grant applicants. While the loans of 16 million have been approved to participate in the program but they will not see debts forgiven until it is proven that the White House succeeds in court.
For now, borrowers should put aside funds as if they're repaying their full student loan and not take on excessive expenses, according to Scott Buchanan, executive director of the Student Loan Servicing Alliance.
"If you are able to get loan forgiveness is granted, then great, you'll have a win in certain ways, and you'll have extra money that now you can put towards various other costs," the expert says.
>> MORE:
When will forbearance end?
The expiration date of the forbearance program -- the interest-free pause on students' loan payments that started in March 2020 hinges on the legal outcomes of Biden's debt cancellation strategy.
We don't know when it will be over under the most recent guidelines. In November, there was a change in the White House . Repayment is now scheduled to resume 60 days after the lawsuits that challenge the comprehensive debt forgiveness plan are resolved or 60 days after July 30, 2023- whichever comes first.
The interest-free period could last until August, if not earlier however, borrowers must be prepared to pay back loans sooner. The Supreme Court will hear oral arguments in February, with an immediate decision to be issued in the case of the lawsuits that have blocked implementation of Biden's debt cancellation plan.
When can I sign up for the new income-driven repayment plan?
In the event that the White House announced the $10,000-per-borrower student debt forgiveness program in August, it offered a program that drew lesser attention but could be beneficial to thousands of borrowers in the longer time: a new repayment plan that is based on income. At the time, it declared that the new program would set the monthly payment on students with undergraduate loans at "5 percent of the borrowing person's income discretionary," just half that of existing IDR plans.
However, there's no clear time frame for when the borrowers will be able to apply. We're not sure how this new IDR plan will look in its final form, which borrowers will be eligible, and when applications will be open. The draft rules for the plan could be released within the next six months or even within six months According to Betsy Mayotte, president and founder of The Institute of Student Loan Advisors.
"The draft rules could be significantly different from draft to final, but at least we'll have an idea of how this new IDR plan might be like when we receive the draft plan," says Mayotte.
>> MORE:
Can I get rid of student loans in bankruptcy?
In bankruptcy, people have long had the option of requesting that their student loan debt to be eliminated however, it has historically proved much more difficult than the discharge of other debts of the consumer, such as medical and credit card debts. This is because the borrowers needed to demonstrate to a judge the student loan was a source of hardship, a lengthy process to be able to get relief.
That changed in November, after both the Departments of Justice and Education jointly released the new guidelines attempting to standardize what constitutes "undue difficulty." A bankruptcy judge is still able to take a final ruling in each case.
"Today's guidance offers a better and more fair, transparent procedure for student loan borrowers in bankruptcy" said Vanita Gupta the associate attorney general of the Justice Department, in a press announcement.
The bankruptcy process is open to borrowers according to the new guidelines currently, but Stanley Tate, an attorney who is a specialist in student loans, suggests borrowers who've been paying for at least 20 years consider abstaining until the funds are added to their accounts in July prior to taking any action. (The White House unveiled the one-time IDR waiver, which is separate from the new IDR plan, beginning in the month of April, 2022. The waiver will be counted every month you've paid in installments or on pause since you left school toward forgiveness, moving some people closer to the finish line.)
"It could be that your loan is automatically wiped out ... which means there's not much benefit of going that bankruptcy route," says Tate.
What's happening with the Joint Consolidation Loan Separation Act?
In October, Biden signed the Joint Consolidation Loan Separation Act into law. The law allows borrowers who previously had consolidated the student loans with their spousein a program that ran from 1993 until the year 2006 -- to segregate them. The program will also permit couples with consolidated loans to take advantage of Public Service Loan Forgiveness, after they separate their debt.
For those with consolidated loans This new law will support "freedom from financial and domestic misuse, the ability to regulate 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.) who is the bill's co-sponsor, in a press release.
The Education Department holds at least 13,000 joint consolidation loans, according to Warner's office. We aren't sure how long it will take for the new law to be fully implemented, or what the application process will look like, or what documents will be required.
Subscribe to emails from to receive information from the Education Department about how and when to apply.


About the author: Eliza Haverstock is a principal writer on the NerdWallet's Student loan team that covers loan repayment and alternatives to traditional four-year degree programs.







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