2022 was a big year for student debt — and we predict 2023 will be even bigger.

Here’s a look at the twists, turns, and milestones on deck for the new year:

 

A make-or-break moment for forgiveness

The Supreme Court said that it will review the legality of President Biden’s student loan forgiveness program in February — and expedite its ruling afterwards. The announcement is a major turning point in the fight for Biden’s debt relief plan, which has been blocked from moving forward by multiple lawsuits challenging its legality and fairness. 

If the Court allows the Department of Education (ED) to implement its forgiveness program, borrowers who earn less than $125,000 (for individuals) or $250,000 (for married couples or heads of households) would receive up to $10,000 in debt forgiveness — and that number increases to $20,000 if the borrower received a Pell Grant during their undergraduate studies.

As a result, an estimated 20 million borrowers would have their federal student debt forgiven in full, and 20 million more would see their balance – and monthly minimum payment amount — drop.

 

The return of student loan payments

If the legal challenges against Biden’s forgiveness program haven’t been resolved by June 30, 2023, the moratorium on federal student loans will resume 60 days later. But if a resolution is reached sooner than that — which is likely, as long as the Supreme Court is able to reach its decision soon after it takes on the case in February —  the freeze will end 60 days following the Court’s ruling.

This latest extension is the eighth of its kind since the moratorium first paused monthly federal student debt payments in March 2020 — and impacted borrowers are now anxiously awaiting their first student loan bill in almost three years. 

 

A one-time break for borrowers — plus long-term support

Income-Driven Repayment (IDR) plans and Public Service Loan Forgiveness (PSLF) are intended to forgive borrowers’ remaining federal student debt after 10-25 years of repayment. But for too long, these programs have remained inaccessible and underutilized.

In July 2023, ED plans to launch a new IDR plan and implement new guidelines for PSLF to help the programs reach more borrowers more effectively. ED will also issue a one-time account adjustment that will retroactively grant eligible borrowers credit for periods of repayment that were previously ineligible for the programs’ requirements. 

 

A major shift in how borrowers save for retirement

After receiving almost unanimous bipartisan support in the House in 2022, insiders expect the SECURE Act 2.0 to become law in early 2023 — if not sooner. 

When passed, the bill will allow employers to match employees’ student loan payments as tax-advantaged retirement contributions. This will be a game-changing opportunity to break through to new participants, considering that a quarter of the 30 million Americans who have access to a retirement plan through work but don’t participate say they’re sidelined because of their student debt.