Suze Orman shares how your student loan might still be forgiven

The U.S. Supreme Court blocked President Joe Biden's plan for millions of student loan recipients to receive relief on June 30.

The plan would have canceled up to $20,000 in student debt for Pell Grant recipients and up to $10,000 for other borrowers.

DON'T MISS: Why Suze Orman Says Student Loans Are About to Change How You Live 

The court ruled 6-3 that U.S. Secretary of Education Miguel Cardona did not have the power to forgive the loans under the HEROES Act, which was passed by Congress in 2020 in an effort to provide relief during the covid pandemic.

The ruling insisted that only Congress had that power.

In any case, the covid-triggered halt to monthly student loan payments will end this fall, as payments are set to begin again Oct. 1.

Suze Orman says the effort is still moving forward

But personal finance author and personality Suze Orman says this isn't the end of the student loan forgiveness effort.

"The Biden administration is still moving forward with other ways to help federal loan borrowers," Orman wrote in an email to newsletter subscribers Aug. 24. "One plan is already going into effect and is not subject to legal challenges. Another plan may take up to a year to get approved, but if it does it could provide relief for millions of federal loan borrowers."

The first plan involves borrowers who have paid regularly and on time on income-driven repayment plans (IDRs) for 20 or 25 years (depending on the plan in which one is enrolled).

Any remaining balance on these plans was to be forgiven, but the bookkeeping for the plans was in terrible shape.

"The Biden Administration has announced a plan, effective immediately, that basically cleans up the mess," Orman wrote. "It says it will be forgiving $39 billion in federal student loans owed by more than 800,000 borrowers who have fulfilled the 20-25 year repayment requirement. Even better, the administration is notifying people starting this month if their remaining balance is being forgiven; there is no need to apply."

A plan where your balance will never grow

For those in IDR plans that don't qualify for the 20- or 25-year payment requirement, there is still some good news, Orman wrote, but that news is coming next summer.

"The Department of Education is launching a new IDR plan that will ensure your balance can never grow (from added interest payments) if you make on-time payments," Orman wrote.

The personal finance expert also called attention to a proposal that she says could help even more student loan recipients:

The Department of Education is pursuing a different path to deliver widespread debt forgiveness similar to the proposal the Supreme Court nixed. The difference this time is that the administration is using existing legislation — The Higher Education Act — as the underpinning for the program.

That puts it on more solid legal ground than the original plan, which was presented as a necessary emergency response to the economic fallout of the Covid pandemic.

But we’re going to need to be patient. There is a set rulemaking process for this proposal tied to the Higher Education Act that must go through. And that could take up to a year. I will keep you posted.

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