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Loan Forgiveness in Suspension: How to Prepare Financially for Student Loan Uncertainty in 2023

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SPOKANE, Wash. — In almost a month, it would be time for those with student loan debt to start paying it off.

But due to legal hurdles to President Biden’s student loan forgiveness plan, that deadline has been extended to June 30, 2023 at the latest.

More than 26 million borrowers have applied for student loan forgiveness to erase $10,000 or $20,000 in debt, depending on how they qualify.

But unfortunately, we don’t know exactly when that will happen.

As expected, President Biden’s executive order on student loan forgiveness was challenged in court.

Applications for clemency were stopped and lawsuits against the program are still pending.

David Altmeyer, owner of Altmeyer Financial Group in Spokane, shared what borrowers can do to prepare for what’s next.

He says student loan debt is just one part of the financial woes plaguing Americans.

“Even if we get rid of the student loan issue, we’re still going to have a debt problem in this country and the question, ‘How am I going to manage my personal finances with debt?'” Altmeier said.

If you applied for and were approved for student loan forgiveness, you may have received a letter from the US Department of Education telling you that your application is on hold while the forgiveness program is pending in court.

The two cases are now on appeal, and the Biden administration has asked the Supreme Court to resume its pardon efforts, but we don’t know how the court will respond or how long it will take to hear back.

Altmeier says that student loan borrowers should go in 2023, assuming the debt is here to stay.

“Let’s assume it doesn’t get paid, and at least take that money and pay off other debts in the meantime,” Altmaier said.

In other words, use the first six months of 2023 to prepare yourself to be financially fit enough to start paying off your student loans again.

Here are some tips for managing your finances from Altmeyer Financial Group:

  • Set a repayment schedule for your student loans
  • Take care of any other outstanding debt
  • Contribute to your 401K and work for 10% in the long run

Of the 26 million student loan borrowers who applied for forgiveness, 16 million applications were approved.

Taking the extra time to manage your finances while your loan forgiveness plan is on hold will better prepare you for whether or not your plan will succeed next year.

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