Student loan debt has long been a source of uncertainty for many borrowers, but heading into 2023, that uncertainty is reaching stressful new levels. With the future of student loan debt relief hanging in the balance, many borrowers are left wondering when or if repayment will restart after years of payment pause. Things are even more unclear for the 25 million people who would still have remaining student loan debt balances after the proposed student loan debt relief. (Source: Congressional Budget Office).
The future of the proposed One-time Federal Student Loan Debt Relief plan is currently in the hands of the U.S. Supreme Court (Source: CNN). Lawsuits have blocked the rollout of President Biden’s plan until the court reaches a decision in the matter. In December 2022, the court announced it will begin hearing arguments in the case in late February 2023 (Source: Forbes). To date, 16 million borrowers have already been approved for the plan, with millions more eligible to apply; however, new applications are currently paused, and no loans have been forgiven.
Although the student loan repayment pause has been extended for the eighth time in more than three years, the pause is expected to end 60 days after the lawsuits are resolved or on June 30, 2023; whichever comes first (Source: NerdWallet). Depending on how quickly the court makes their decision, borrowers could need to be ready to resume payment as early as Spring 2023.
Even if the proposed student loan debt relief program survives the U.S. Supreme Court, the truth is that many borrowers will still suffer under the financial burden of student loans.
Student Loan Forgiveness by the Numbers |
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Current $1.6 trillion 43 million (Source: Congressional Budget Office) |
Post Student Loan Debt Relief $1.17 trillion 25 million |
By nature of the amount of education required for certain jobs, student loan borrowers in some career sectors may bear the burden of lingering student loans more than others.
Nurses
Lawyers
Engineers
The estimated 25 million borrowers with remaining loan debt, especially in certain professional career sectors, may still need student loan support, especially in challenging economic times. In fact, these borrowers are already struggling with financial stress — a reality that not only affects their mental and physical wellbeing, but costs U.S. employers over $4 billion in lost productivity each year (Source: HR Morning).
In addition to the lost productivity costs, the issue of student loans is also contributing to additional costs in turnover, training and recruitment for employers.
Unfortunately, the uncertainty of the future of student loan debt will remain at least until the U.S. Supreme Court reaches a decision about the One-time Federal Student Loan Debt Relief plan. Regardless of that decision, a large number of borrowers will still face the negative impacts of student loan debt well into the future. In the meantime, employers can position themselves and their employees for success.