For tens of millions of borrowers, the possibility of temporary damage to some borrowers’ credit ratings is the only drawback to the student loan forgiveness program.
Since the outbreak, the government payments freeze has helped students’ payment histories thanks to their student loans.
Backup Plan for Student Loan Debt Forgiveness
According to consumer credit reporting agency Experian, the most significant credit category is frequently payment history, which makes up 35% of a credit score.
The amount owing is ranked second, followed in nearly that order by credit history (15%), credit categories, new accounts, and credit inquiries, each of which is ranked at 10%.
Education Department and the over 300,000 borrowers of student loans who felt cheated by their colleges.
The 2019 class-action lawsuit that led to last week’s ruling had nothing to do with the cases contesting President Joe Biden’s proposal for widespread debt relief.
The conservative justices of the court showed great skepticism about the proposal, which would cancel up to $20,000 in debt for low- and middle-income Americans, during oral arguments for both cases earlier this year.
The Supreme Court’s most recent ruling, however, provides a viable backup plan in the event that Biden’s proposal is rejected and indicates that the Court is willing to take debt forgiveness for at least certain students into consideration.
Read more: Resuming Repayments; Suspension Of Student Loan Is Likewise Prohibited
Procedures of Loan
The procedure is mainly designed to help former students of for-profit colleges who struggle to find employment and default on their loans at noticeably larger rates than students who attended other types of higher education institutions.
Student loan borrowers who are the victims of fraud by their schools may be eligible for relief through a procedure known as “borrower defense to repayment.”
“The schools set their sails to catch political headwinds by equating falsely the settlement of long-running and hard-fought litigation with a completely different program of broad-based debt cancellation that is currently under review by the Supreme Court,” claimed Eileen Connor, president and director of the Project on Predatory Student Lending.
Unfortunately, those who endured such a long wait for the simple recognition of their legal rights are now becoming entangled in political and ideological goals that are mostly unrelated to them.
The Education Department will have finally discharged $20 billion in student loan debt through borrower defense claims or closed school discharge after the court refused the motions for a stay last week.
Read more: GOP’s Latest Debt Ceiling Bill Proposes Ban On Student-Loan Forgiveness And Payment Pause