Student Loan News for Sept 2024

Student loan news for Sept 2024

The past few weeks have been jam-packed with student loan news. In addition to some major lawsuit updates, a perfect storm is brewing for Income-Driven Repayment (IDR) plan recertifications, and a recent court ruling could impact your employment contract. But to balance out all this negativity, there are some positive indicators regarding interest rates. So let’s dive in! 

Court Blocks Biden’s Plan B for Loan Forgiveness 

In a bombshell court filing September 3rd, seven GOP states filed an emergency lawsuit to immediately block Biden’s second (or third) attempt at mass loan forgiveness. They claim the Department of Education (DOE) secretly and deceptively communicated with servicers to start forgiving student loans before any lawsuits could get in the way. A federal judge in Georgia agreed, finding the complaints and evidence compelling enough to issue a 14-day restraining order blocking Plan B from going into effect. Learn more about Plan B here, and follow our ongoing lawsuit coverage here.  

SAVE Plan Lawsuit Update 

By now, most borrowers know the SAVE plan has been completely blocked (at least temporarily) by the 8th Circuit Court since July. On August 15th, the Biden administration asked the Supreme Court to step in and provide immediate relief. The high court said NO on August 28th and encouraged the 8th Circuit to issue a final ruling as soon as possible. We suspect they will ultimately strike down the entire SAVE plan. If/when they do, DOE will again appeal to SCOTUS to take up the case. We’re starting to wonder if SCOTUS will deny that request and leave it be. Honestly, that may be a good thing for borrowers. If SAVE is ultimately doomed, this will allow DOE to reinstate old plans faster and let borrowers get back to a normal routine. Follow our ongoing coverage here.  

Perfect Storm Brewing for IDR Plans 

Some borrowers utilizing IDR plans should have renewals letters hitting their inboxes this month. But online applications are still down, and processing is still paused. And with the SAVE plan lawsuit impacting PAYE and REPAYE, this situation impacts nearly all IDR borrowers. And as we stated above, it is unlikely DOE will turn those applications back on until they get a final decision from the courts. We suspect another IDR recertification extension is coming. If not, this is going to be quite the pickle.  

Other News 

There are a few other quick headlines to share:  

• The FTC’s unprecedented law banning non-compete clauses in employment contracts was recently struck down by a court in Texas. This is a very big deal, and we won’t be surprised if SCOTUS has the final say. This is big news for many of our physician clients, so we’re keeping an eye on it. 

• The “on-ramp” for borrowers to resume making student loan payments ends Sep 30th. After that date, late payments will be reported as delinquent and can have major impacts on your credit report and student loan options. This DOES NOT impact anyone in forbearance.  

• On a positive note, members of the Federal Open Market Committee (FOMC) recently made comments suggesting they are generally happy with the progress on inflation. As such, they may issue a rate cut as soon as their next meeting which is set for September 17th and 18th.  

We’ll end with one very important note: the above-mentioned lawsuits and other stories are developing rapidly and will have major impacts on most borrowers. We are tracking developments daily and typically post them to our social media accounts within a few hours. So please do yourself a favor and follow us on Facebook, LinkedIn, Instagram, and “X”.  

Thanks!