WSJ Your Money Briefing - New Student-Loan Relief Rules Are Being Finalized

Episode Date: August 1, 2024

While elements of President Biden’s federal student-loan forgiveness proposals are held up in litigation, the White House is pushing for more relief for borrowers. Wall Street Journal personal-finance reporter Katherine Hamilton goes over the latest with host J.R. Whalen. Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Your teen requested a ride, but this time, not from you. It's through their Uber Teen account. It's an Uber account that allows your teen to request a ride under your supervision with live trip tracking and highly rated drivers. Add your teen to your Uber account today. Here's your Money Briefing for Thursday, August 1st. I'm J.R. Whelan for The Wall Street Journal. Since the Supreme Court voted down President Biden's student loan forgiveness plan last year,

millions of borrowers have been making their monthly payments as usual. But elements of the president's new plan are still facing legal challenges. And this week, Biden sent an email blast with an update. The Biden administration has rolled out and is still developing a new plan that's based on a different law than the previous plan was. And there are lots of different parts of that plan that affect different borrowers with different income levels and other categories. So where do things stand? Wall Street Journal personal finance reporter Catherine Hamilton

will bring us up to speed on student loan forgiveness efforts. After the break. RPC has helped millions of young Canadians turn their most likelies into most definities, making their ideas happen with scholarships, internships, and skill development, plus resources for artists and athletes. Learn more at rbc.com slash support youth. The White House is renewing its push to have student loans forgiven. Wall Street Journal personal finance reporter Katherine Hamilton joins me.

Katherine, bring us up to speed for a moment. What's happened to forgiveness efforts since the Supreme Court struck down President Biden's plan last year? The Biden administration has rolled out and is still developing a new plan that's based on a different law than the previous plan was. And there are lots of different parts of that plan that affect different borrowers with different income levels and other categories. And overall, the plan promises to forgive at least some federal loans for about 25 million borrowers. And one of the parts of that overall plan is the SAVE plan, which has seen some legal challenges already.

That's the SAVE plan, saving for a valuable education. That was blocked by an appeals court last month. What is the SAVE plan and how did that affect people's loans? The SAVE plan is part of this new plan that the Biden administration is rolling out. It affects primarily lower and middle income borrowers. But the most recent legal challenge, Missouri court basically put the entire plan on halt and they're trying to establish whether or not they think Biden is overstepping his bounds as president by establishing the SAVE plan. So until they make that decision, that plan is on hold. So right now, everybody's loans are in forbearance without interest, which means they don't need to pay their loans right now and they're not accruing interest on those loans. Does that mean the interest on their loan is forgiven? Not quite. They don't need to pay their loans for now, and they're not accruing interest on their loans at this time. Where does that leave borrowers who resumed paying off their loans last year when the Supreme Court ruled?

So most borrowers right now are still paying their loans as they would at any other time. Since the pandemic pause ended last October, those payments have resumed for most borrowers. This week, millions of borrowers got an email from the White House and President Biden about this topic. What did Biden say in the email? That email essentially was just to update borrowers that the administration is still working on the plan, still hoping to finalize the plan before the November election this year, and essentially just let borrowers know that it's still a top priority of the administration. How does the administration hope to get its widespread forgiveness plan back on track, given all the legal challenges?

Right now, for the challenge to save in the Missouri court, there's not too much they can do. They haven't said whether they plan to appeal that decision. And that's the primary legal challenge right now. Whether or not it goes up to the Supreme Court and becomes a larger challenge has yet to be seen. What actions need to be taken on the part of borrowers to ensure that they can reap the benefits of the forgiveness plan? of the forgiveness plan? Borrowers actually don't have to do much. They're automatically enrolled into this plan. And so what the email was saying is that if borrowers want to opt out of this plan, they have until August 30th to do so.

And if they don't, they're just automatically enrolled. And if they're eligible, we'll have some of their loans forgiven. Why would somebody want to opt out of it? That's a good question. It's personal preference. Some people might do it as a protest if they don't agree with student loan forgiveness. But other than that, personally, I'm not sure. All right. That's WSJ reporter Katherine Hamilton. And that's it for your Money Briefing. We'll be back tomorrow with WSJ's Jacob

Pasi to discuss why more Americans are choosing to travel by train instead of taking a car or a plane. This episode was produced by Zoe Culkin, with Deputy Editor Chris Zinsley. I'm J.R. Whelan for The Wall Street Journal. Thanks for listening.