In its 6-3 decision this week, the U.S. Supreme Court dashed the hopes of millions of Americans struggling with unmanageable student loan debt. The latest SCOTUS ruling now means that those students who would benefit from President Biden’s debt discharge would instead have to continue paying on their student loans, some of which were now decades old.
Chief Justice John Roberts wrote the decision ruling in favor of six states that argued the Biden Administration overstepped its authority when it issued a sweeping debt forgiveness plan that wiped out $430 billion in student loan debt.
Who is most at risk?
The 7.5 million Americans who opted into the “fresh start” program at the height of the pandemic could fall through the cracks during the restart. These debtors are now in default status and will see the interest on their loans accrue once more in September – and their first payments come due in October.
Involuntary collections could occur with their accounts and they won’t be able to access any of the more flexible plans for repayment unless they reach out to the servicer of the loans and opt into the program. Many of those in this category remain economically vulnerable and least able to remain out of default status.
Older borrowers, too, face challenges, as the likelihood of their loan servicers changing companies (often multiple times) makes it harder to connect with those now calling in markers on debts that they may have put out of their minds.
Beware of bad actors
As always when they see an opportunity, scammers will make a play to get their hands on these consumers’ funds. Unethical debt collectors could attempt to bully debtors or outright lie to them about their responsibilities regarding their loans. If you suspect that someone is trying to collect a debt that you may not owe, learning more about the laws covering collections can help you plan a strategy for dealing with your student loans.