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The Supreme Court has struck down the Biden administration's student loan forgiveness plan. In , the court ruled 6 to 3 on June 30, 2023, that the secretary of education to forgive US$430 billion of student loans under the .

That kills the president's proposed plan to forgive in student loans per borrower for those with incomes under $125,000 per year, or $250,000 per year for couples. Under the president's plan, those who would have been eligible to cancel up to an additional $10,000 in student loans.

Just hours after the decision, to .

To give borrowers time to "" Biden stated that the Education Department won't refer borrowers who don't pay their student loan bills to credit agencies for 12 months.

Secretary lacks authority

In the majority opinion, Chief Justice John Roberts—joined by his five other conservative colleagues—stated "The HEROES Act allows the Secretary to 'waive or modify' existing … financial assistance programs under the Education Act, but to the extent of canceling $430 billion of student loan principal."

Currently, in federal student loans, with an . Student loan borrowers haven't had to make payments on their federal loans—or accrue interest on those loans—, when the Trump administration put the payments on pause due to the COVID-19 pandemic.

But that will change on , when interest will once again begin to accrue on outstanding student loans. Payments on the actual loans is set to resume in October 2023.

When payments resume, the average student loan payment is expected to be between and . For those that resume making their federal student loan payments on time, this may lead to an , while those that miss the first payment after payments resume can expect their credit score to fall.

Prior to the student loan pause, approximately —out of 43 million—were in default on their federal student loans.

These borrowers can apply for the . For borrowers who are behind on their federal student loan payments, this program allows student loan borrowers to reset their loan so they won't be considered past due anymore.

In addition, any negative entries on their credit report due to being behind on their student loans will be removed. About 80% of Fresh Start borrowers enroll in an . Such a plan calculates a borrower's monthly federal student loan payment . Monthly payments under this plan will not exceed 20% of the borrower's income. Those with have lower monthly payments. Currently, about half of the Fresh Start borrowers pay $0 a month.

It is estimated that student loan borrowers pay about on their federal student loans. Any economic benefit that borrowers may have gotten from the suspension of student loan payments is likely to have already been absorbed into the economy over the past three years. In other words, any money borrowers had to spend as a result of the student loan pause has already been spent.

With the resumption of student loan payments, there will likely be a small but . This reduction in spending on goods and services is estimated to

When student loan borrowers begin to repay their loans in October, those dollars will no longer be available to pay for other things like food, rent, clothing or gas. So it won't only hurt the economy, but it will hurt people, too.

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