The first week of October proved challenging for many Americans facing student loan debt.

On the Monday of that week, a year-long grace period for borrowers ended, worsening the financial strain for those who had been unable to make payments since the pandemic-related pause ended a year prior. Just two days later, a program designed to assist borrowers in default also came to an end.

Following this, on Wednesday, a federal judge in Missouri put a halt to President Joe Biden’s plans for a more comprehensive student loan relief initiative. This regulation—Biden’s “Plan B” after the Supreme Court rejected his original proposal—aimed to completely eliminate debt for millions of long-standing borrowers and forgive excessive interest for many others. This decision was particularly alarming since a federal judge in Georgia had approved the plan only the day before.

In summary, the federal student loan system is in a state of greater disarray than usual. With Election Day fast approaching, the Missouri case and various other legal challenges have obstructed several potential avenues for the relief that Biden and Vice President Kamala Harris promoted earlier this year. As a result, borrowers in precarious financial conditions are now facing harsher penalties for missed payments than they have in years.

The possible consequences for the upcoming election due to this legal turmoil are uncertain. However, the increased political conflict surrounding the student loan system has left many Americans feeling financially immobilized.

“I wouldn’t expect this to be settled before the election,” remarked Preston Cooper, a senior fellow at the conservative think tank American Enterprise Institute. “If you’re waiting in hope, you might be waiting a long time.”

This week, the Education Department expressed urgency, reminding borrowers that they have only three months until they face penalties for late payments, making it crucial to support student borrowers and reform the failing student loan system.

Status of Student Loan Relief

Following the Supreme Court’s rejection of Biden’s first major effort to assist struggling borrowers—many of whom could have had up to $20,000 of debt erased—the president’s alternative strategies have attracted significant attention. With multiple paths to possible loan relief being pursued, various court cases are progressing on distinct bases.

The reforms facing less challenge are less controversial and smaller in scale. For example, revising the guidelines for student loan bankruptcy represents a debt relief method that has faced fewer legal obstacles. The administration has also made it easier for more students who believe they were misled by their institutions to submit “borrower defense” claims for debt cancellation.

“They have provided unprecedented levels of debt relief,” stated Sara Partridge, associate director of higher education policy at the liberal think tank Center for American Progress. Earlier this year, the Education Department reported that the Biden administration had forgiven approximately $170 billion in student loan debt for around five million Americans.

However, the larger reforms faced significant courtroom resistance. Just weeks after the Supreme Court’s controversial decision in 2023, the Biden administration started enrolling borrowers in a new income-driven repayment plan named Saving on a Valuable Education, or SAVE. Education Secretary Miguel Cardona described it as “the most affordable repayment plan ever.” As of July, about half a million Americans were approved for $5.5 billion in debt relief through SAVE, according to a White House announcement.

As the SAVE program was rolled out, the Education Department began discussions with federal negotiators to devise a broader student loan forgiveness proposal. By April 2024, Biden committed to a separate, more expansive plan that would cancel interest beyond the original loan amounts for 23 million borrowers.

However, by late August, legal challenges initiated by Republican attorneys general halted the implementation of SAVE. The millions of borrowers signed up for this and other income-based repayment schemes are currently in interest-free forbearance as the legal disputes unfold.

“It’s disgraceful that lawsuits driven by political motives from Republican officials are blocking lower payments for millions of borrowers,” Cardona stated in response to the litigation earlier this year. “President Biden, Vice President Harris, and I firmly believe that making college affordable is a cause worth fighting for – and we are not backing down.”

Biden’s broader plan has also been temporarily suspended, a move that former President Donald Trump’s campaign openly welcomed.

“President Biden’s initiative, if that’s what you can call it, is a cynical tactic destined to fail that exploits the fears of young individuals for political purposes and is unfair to the millions who have worked hard to repay their student debt,” commented Karoline Leavitt, the Trump campaign’s national press secretary. (The Harris campaign did not respond to a request for comment.)

Meanwhile, borrowers who are relying on various forms of debt relief remain uncertain about what the future holds.

“Attorney and advocate responses are crucial in navigating these ongoing complexities,” said one advocate.

“Lawyers like me often struggle to find the right advice for clients,” remarked Ed Boltz, a bankruptcy attorney from Durham, North Carolina, who provided guidance to the Education Department concerning its broader forgiveness strategy. “This is a very frustrating period for everyone involved.”

Will the student loan turmoil negatively impact Harris? Unlikely

While student loan forgiveness may not be as critical to voters as subjects like abortion, studies indicate that favoring significant debt cancellation could benefit the Democratic Party politically. In a recent televised debate with Vice President Kamala Harris, Trump took advantage of the chaotic state of the Biden administration’s student loan policies.

“They promised to eliminate student loans, and it turned out to be a complete disaster,” he claimed. “Students have been ridiculed because of this.”

However, many Americans might not hastily blame Biden for the complications surrounding his student debt measures. A survey of 2,000 adults conducted two months after the Supreme Court ruling in 2023 suggests that public sentiment regarding the crisis is more layered. Many people broadly link the student loan turmoil to educational institutions, loan servicers, and the judicial system, according to Mallory SoRelle, an assistant professor of public policy at Duke University, who has examined the political effects of student loan relief.

“President Biden is actually the least blamed,” she said. “Our findings imply that this situation may not impose a significant political burden on Biden or Harris, particularly since Harris is seen as inheriting his legacy.”