Student Loan Forgiveness Update as Millions Prepare for Worst-Case Scenario

As the Supreme Court prepares to issue its final decisions of the term, many are bracing for the prospect that justices will strike down President Joe Biden's student loan forgiveness plan.

The court is midway through what is expected to be its final week before the summer break. The final opinions to be released typically cover some of the most contentious issues facing the court.

The finances and future of more than 40 million Americans with student loan debt are hanging in the balance as they await the decision. It could come on Thursday, when opinions are next scheduled to be released. If not, other opinion days could be added to the court's calendar.

Biden's plan would wipe away up to $10,000 in federal student loan debt for those who earn less than $125,000 a year individually or $250,000 as a family. Pell Grant recipients would get an additional $10,000 in debt forgiven.

The Biden administration has said the plan would benefit up to 43 million borrowers and cancel the full balance of roughly 20 million.

But its chances didn't look good when the Supreme Court heard oral arguments in February.

The court's conservative justices suggested that the administration had exceeded its authority. However, the court could decide the challengers do not have the right to sue and the plan can still go ahead.

Biden said he was committed to providing student debt relief when he vetoed legislation that would have blocked his plan earlier this month.

"I remain committed to continuing to make college affordable and providing this critical relief to borrowers as they work to recover from a once-in-a-century pandemic," he said in a statement.

The White House has not laid out alternatives in case the Supreme Court strikes down the plan.

Progressive activists and politicians have argued that Biden has the authority to forgive student loans even if the court strikes down his plan, calling on the president to use provisions in the Higher Education Act of 1965.

Newsweek has contacted the White House for comment.

Whatever the justices decide, a pause on student loan payments that has been in place since the start of the COVID-19 pandemic will soon come to an end.

Interest on student loans will resume on September 1 and payments will be due from October.

An Education Department spokesperson told Newsweek that it would be "in direct touch with borrowers and ramping up our communications with servicers well before repayment resumes to ensure borrowers and their families are receiving accurate and timely information about the return to repayment."

But some borrowers have told Newsweek that they have no intention of resuming loan payments when the pause ends, saying they cannot afford it.

The repercussions of not making repayments can be severe: those who can't or don't pay risk delinquency and eventually default, which can badly hurt your credit rating and exclude you from future aid and government benefits.