Waiting For Student Loan Forgiveness Stimulus Checks? Don't Hold Your Breath
Mixed signals and misinformation currently reign supreme when it comes to understanding what might be possible in the student loan forgiveness realm, not to mention when, and how. President Joe Biden's student loan relief plans have certainly weathered some changes since his initial campaign promise. Plus, a Supreme Court stacked with quite a few relative newcomers to the land's highest court haven't always seen eye-to-eye with Biden on relief plans.
Also, the roller-coaster ride of Biden and Vice President Kamala Harris' student loan forgiveness plans and policy pitches have been refracted like a funhouse mirror in press coverage as well. It's perhaps due to the combined factors of fact, financial hopes, and frustrations that have fed the myth of a stimulus check for student loan forgiveness. Dive deeper with us as we investigate a bend of words when it comes to the possible "stimulus" tied to student loan forgiveness. (On that note, as well, here's how to choose the best student loan repayment plan for you.)
Where the student loan forgiveness plan stands today
The Biden-Harris student loan forgiveness plan has undergone several revisions and setbacks. In August 2023, the administration unveiled the latest iteration of the Saving on a Valuable Education, or SAVE, plan. The SAVE plan is a response to a June 2023 Supreme Court ruling that blocked a previous student loan relief plan, which rode COVID-19 relief coattails and promised to cancel $400 billion in student loan debt. The Supreme Court blocked the effort, with a 6-3 decision essentially split along party lines.
An alliance of seven Republican-led states again challenged the Biden-Harris forgiveness plan with legal action in August of 2024, arguing that federal loan servicers were being unfairly burdened with debt-repayment erasure. The 8 million people already enrolled in SAVE faced halts to some of the program's relief measures, but could take advantage of some others, after a Missouri federal judge made their ruling against SAVE.
If your head hurts harder than deciding the best method to calculate your student loan interest, you might want to take a deep breath, because it's about to get worse. In early October 2024, a Georgia federal judge granted the latest Biden-Harris student loan forgiveness plan the go-ahead — only for a different judge in Missouri to block the effort not a day later. As of this writing, less than a month before the November 5 election, the student-debt relief agenda is in hotly debated limbo in Missouri, and the rest of the country.
No stimulus checks, but a promise of debt relief
Student loan forgiveness relief plans feel trapped in a constant, confusing cycle of approval and rejection. Yet no stimulus check payments have ever been promised as a form of student loan forgiveness relief. However, hopeful language used in an article by TheStreet, along with some relief efforts being linked to the COVID-19 stimulus checks, might have helped to feed a misinformed narrative.
For an article published on October 5, 2024, financial media outlet TheStreet used the headline "Student loan forgiveness to give millions of Americans a stimulus payment," and compared student loan forgiveness to the kind of relief that Americans received during the COVID-19 pandemic (via stimulus checks). Add to this, another TheStreet article (updated on October 10) that also referenced "payments," and said that student loan forgiveness could be viewed as a "stimulus plan that might help boost activity in the housing market." To be abundantly clear, however, no stimulus checks (payments) are promised as a form of student loan forgiveness; this was never the case.
This said, freeing millions of Americans from $1.7 trillion in student loan debt could have untold impact on the U.S. economy. Instead of stressing about what really happens if you don't pay off your student loans or paying huge amounts of interest on predatory loans, borrowers could use the money instead for their savings, a down payment on a new home, or a business venture of their own. The Biden administration's plan, if allowed to proceed, would forgive $73 billion in student loan debt, held by some 27.6 million Americans, as reported by Reuters.