2023 Is Here -- and Big Questions on Student Debt Loom

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2023 Is Here -- and Big Questions on Student Debt loom
As 2023 unfolds, big questions remain around new repayment plans, debt cancellation, bankruptcy regulations and much more.
by Eliza Haverstock Lead Writer | Student loan repayment alternative to college Eliza Haverstock is a lead writer for NerdWallet's students loans team, which concentrates on loan repayment as well as alternatives in lieu of traditional bachelor's degrees. She previously covered billionaires and investing, personal finances and fintech-related fraud in Forbes 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 and Bloomberg, where she worked for the summer writing a feature on straws made of plastic. She lives in 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 the executive editor of HealthCentral. She launched her journalism career at The Associated Press and later was employed by The (Riverside) Press-Enterprise, The Seattle Times, PCC Community Markets and Allrecipes.com. She has had her writing recognized with awards from the Society for Features Journalism and the Society of Professional Journalists. She's written two books about her experiences in the Pacific Northwest.







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From the introduction of new repayment policies to a massive single-time debt forgiveness program 2022 was an eventful year for student loans.
But there are still questions about students' loan statements, but the answers are few and far between. We don't yet know what, when, or if any of these changes will develop into.
As 2023 approaches, here are the biggest questions surrounding student loans in the coming year -- as well as how borrowers can do to prepare in the face of 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 recipients. Though 16 million borrowers have been approved for the plan, they won't see any debts forgiven until they are successful in court. White House succeeds in court.
For now, borrowers should save money to cover the cost of repaying the full amount of their student loan and not take on unneeded expenses, advises Scott Buchanan, executive director of the Student Loan Servicing Alliance.
"If the loan forgiveness is granted and you are eligible, then you'll have a win in a few ways and additional cash that you can put towards other expenses," the expert says.
>> MORE:
When will forbearance cease?
The date for the expiration of forbearance -- the free of interest 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 when it will end under the latest guidance. In November, we saw the White House . The repayment program is scheduled to be resumed 60 days after lawsuits challenging the debt forgiveness program are settled, or 60 days after June 30, 2023 -or when it is the first.
This means that the interest-free pause could stretch into August at the latest, but borrowers should prepare to begin paying back loans sooner. It is expected that the Supreme Court will hear oral arguments in February, and an urgent decision likely to be issued in the cases blocking implementation of Biden's debt-relief plan.
When can I sign up in the brand new, income-driven repayment program?
When the White House announced the $10,000-per-borrower student debt forgiveness program in August, it also offered a program that drew less attention, but could benefit thousands of borrowers in the longer term: a new repayment plan that is based on income. The White House declared that the new program would set the monthly payment on students with undergraduate loans at "5% of a individual's disposable income" less than half of the amount in the current IDR plans.
But there's no precise time frame for when the borrowers will be able to apply. It's unclear how this new IDR plan will appear in its final form, which borrowers will be eligible, and when applications will be open. The rules in the draft plan could be released within the next six months or even in six months time According to Betsy Mayotte, president and the founder of The Institute of Student Loan Advisors.
"The draft rules could be significantly different in between the draft version and the final, but we'll at least have more information about what the new IDR plan will look like once we get the draft plan," Mayotte adds. Mayotte.
>> MORE:
Can I get rid of my student loans in bankruptcy now?
Individuals in bankruptcy have long had the option of requesting that to have their school loan debt be wiped away however, it has historically proved much more difficult than releasing other consumer debts like credit card and medical bills. This is because the borrowers needed to show a judge that the student loan was a source of hardship, which is a difficult test to be able to get relief.
The situation changed in November as the Departments of Justice and Education jointly announced a new set of guidelines that aimed to uniformize what constitutes "undue hardship." Judges in bankruptcy is still able to take a final ruling in each case.
"Today's guidance offers a better, fairer, more transparent process for student loan customers who have filed for bankruptcy" said Vanita Gupta, associate attorney general at the Justice Department, in a press release.
Borrowers can file bankruptcy cases according to the new guidelines currently but Stanley Tate, an attorney who specialises in student loans, suggests that borrowers who've been in repayment more than 20 years, consider abstaining until the funds are applied on their account in the month of July prior to making any decisions. (The White House unveiled the one-time IDR waiver in a separate announcement from the proposed 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 towards forgiveness, bringing some students closer to crossing the line.)
"It could happen that your loan is wiped out automatically ... so there's really no extra reason to go through the bankruptcy option," says Tate.
What's happening with the Joint Consolidation Loan Separation Act?
In October, Biden announced the Joint Consolidation Loan Separation Act into law. This law will permit those who had previously had consolidated their student loans with a spouse -in a program that was in place from 1993 to 2006 . separate the debts. The program will also permit couples with consolidated loans to access , like Public Service Loan Forgiveness when they have separated their debt.
For those who have consolidated loans the new law will provide "freedom from financial and domestic abuse, freedom to control their own financial future and the freedom to enjoy the same advantages like other borrowers across the nation," said Sen. Mark Warner (D-Va.), the bill's sponsor, in an announcement to the press.
The Education Department holds at least 13,000 joint consolidation loans, according to Warner's office. We do not know how long it will take for the new law to be implemented, or what the application process will look like or which documents it will require.
Sign up for announcements from to receive information from the Education Department about how and when to apply.


About the writer: Eliza Haverstock is a the lead writer for NerdWallet's student loan team covering loan repayment as well as alternatives to traditional four-year degree programs.







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