2023 is Here -- And Big Questions on Student Debt Still Loom

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2023 is Here -- And The Big Questions on Student Debt Loom
As 2023 unfolds, big questions remain regarding new repayment plans, debt cancellation, bankruptcy regulations and much more.
by Eliza Haverstock Lead Writer | Student loan repayment and college alternatives Eliza Haverstock is a lead writer for NerdWallet's students loans team, where she focuses on loan repayment and alternative options to traditional four-year degrees. In the past, she covered billionaires, investing, personal finance and fintech-related fraud for Forbes on the streets of New York, and she also covered private markets for PitchBook in Seattle. Eliza got started at their college paper at University of Virginia and interned for Bloomberg, where she spent an entire year writing a story on plastic straws. Eliza is located within Washington, D.C.





January 4, 2023


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







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From repayment policy changes to a sweeping one-time debt forgiveness policy 2022 was an extremely prominent period for students' loans.
But questions have clouded the student loan announcements, and the answers are scarce and difficult to find. We're not sure of the exact date, time, or when any of these changes will develop into.
In the year 2023, here are the biggest questions surrounding student loans in the coming year -- as well as what the borrowers can do 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 program for qualified borrowers and $20,000 for qualifying Pell Grant applicants. While sixteen million of borrowers had been approved for the plan but they will not see debt forgiven unless the White House succeeds in court.
In the meantime, borrowers need to put aside funds to cover the cost of repaying the full amount of their student loan and avoid taking on unneeded expenses, advises Scott Buchanan, executive director of the Student Loan Servicing Alliance.
"If you are able to get loan forgiveness is granted in the near future, then congratulations, you'll have a win in a few ways and additional money that now you can use for various other costs," the expert says.
>> MORE:
When will the forbearance period end?
The expiration date of forbearance -- also known as the interest-free pause on the student loan payments that started in March 2020 hinges on the legal outcomes from Biden's debt-relief strategy.
We don't know exactly when it will be over under the latest guidance. In November, the White House . Repayment will now be resumed 60 days after lawsuits challenging the debt forgiveness program are settled, or 60 days after June 30, 2023- whichever comes first.
This means that the interest-free pause could last until August, if not earlier, but borrowers should prepare to pay back loans sooner. It is expected that the Supreme Court will hear oral arguments in February, with an urgent decision likely to follow in the case of the lawsuits that have blocked implementation of Biden's debt cancellation plan.
When do I have to sign up for the new income-driven repayment plan?
When the White House announced the $10,000-per-borrower student debt forgiveness program in August, the White House also offered a program that drew less attention, but could benefit countless borrowers in the long time: a new option for repayment plans that are based on income. The White House stated that the new plan would set the monthly payment for student loans at "5 percent of a individual's disposable income" just half that of the current IDR plans.
However, there's no clear date for when people can join. We don't yet know exactly how this new IDR plan will appear in its final form, who will be eligible, and when applications are expected to open. The rules in the draft plan could be published in the next few days or within six months, says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors.
"The draft rules can be significantly different in between the draft version and the final but at least we'll have more information about what this new IDR plan could look like once we get the draft plan," Mayotte adds. Mayotte.
>> MORE:
Can I pay off student loans in bankruptcy now?
People who are in bankruptcy have for a long time had the option of requesting that their student loan debt be wiped away however, it has historically been more challenging than discharging other consumer debts like medical or credit card bills. That's because borrowers had to prove to a judge that the student loan was a source of hardship, a lengthy process to be able to get relief.
That changed in November, when the Departments of Justice and Education jointly released new guidelines attempting to standardize how to define "undue hardship." The bankruptcy judge is still able to take a final ruling in every case.
"Today's guidance outlines a better and more equitable, as well as more transparent procedure for student loan customers who have filed for bankruptcy," said Vanita Gupta an associate attorney general with 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 specializes in student loans, suggests that borrowers who've been in repayment more than 20 years think about keeping the loan until it is applied to their accounts in July prior to making any decisions. (The White House unveiled the one-time IDR waiver that is distinct from the proposed IDR plan, in April 2022. The waiver will be counted each month you've spent in repayment or on pause after leaving school, and will move some students closer to crossing the line.)
"It may turn out your loan is wiped out automatically ... so there's no benefit of going that bankruptcy process," says Tate.
What's happening with the Joint Consolidation Loan Separation Act?
Then, in October of this year Biden signed his Joint Consolidation Loan Separation Act into law. This law will permit people who have previously consolidated the student loans with a spouse -in a program that was in operation from 1993 until 2006 -- to finally split the loans. It will also allow couples with consolidated loans to avail benefits, such as public service loan Forgiveness following the separation of their debt.
For those with consolidating loans This new law will ensure "freedom from financial and domestic misuse, the ability to regulate their own financial future and the freedom to receive the exact rights that other borrowers throughout the country," said Sen. Mark Warner (D-Va.) the bill's sponsor in a press release.
It is estimated that the Education Department holds at least 13,000 joint consolidation loans According to Warner's office. We don't know when the law will be fully applied, what the process for applying will look like or what documents will be required.
Get updates 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 covering loan repayment as well as alternatives to traditional four-year degrees.







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