Supreme Court Rules Out Federal Student Loan Cancellation: What You Need To Know | Ep. 243

Intro/Outro: You know what it is. That’s right. It’s time to talk money with your money nerd and financial coach. Now tighten those purse strings and open those ears. It’s the Money Talk with Tiff podcast.

Tiffany Grant: Hey everyone, and welcome to another episode of Tiffany’s Take where I answer your money questions. So if you would like your question answered, go to www.moneytalkwitht.com/ask Tiffany, and I will be more than happy to answer for you.

So a lot of people have been reaching out to me about the Supreme Court rulings that has happened over the past week, uh, and it has been a lot. And so, uh, I wanted to address, Some of these concerns, at least as it relates to money. Now they did a lot of controversial rulings. Uh, so to recap really quickly, uh, they killed Joe Biden, president Joe Biden’s, 400 billion plan to cancel a reduced federal student loan debts, which is what I’ll talk about today.

They ended affirmative action at the higher education level. So meaning, uh, you know, schools can no longer look at race in their decisions. In, um, admitting students into their programs, which has consequences as well, but I won’t get into that. Um, I might do that for a live or something, so make sure you follow me on social media.

And then they issued a major decision that impacts gay rights as well. So a lot of this stuff has happened over the past week, so it’s super important for you to dive into what has been ruled, um, where we’re at with. The laws and how that affects your personal situation. But for the purposes of this podcast, I’m going to, going to stick to the student loan debt situation because I’ve talked about it a lot.

You know, when I was doing my finance Friday Lives and those episodes made it to the podcast and we were waiting. Oh, so patiently for that, uh, re reduction or cancellation of federal student loans. And now we know that that’s not going to happen. So now that we know that, that’s not going to happen, I wanted to hop on the podcast today and talk about what to do next, because I know a lot of people are really, you know, First of all, taken aback because they were waiting on it.

But also they’re wondering, okay, now what? And so let’s address that. So first and foremost, uh, student loan payments are set to resume in October, and interest will start accumulating on September 1st. So it’s been three years. Um, since we have had to pay for student loans, um, if you have federal student loans, and it’s been three years since interest had stopped accruing, and so now everything is going back.

It’s like we hit the pause button and now we’re hitting play to pre covid i d. Okay, so. With that being said, your situation might be completely different than what you were looking at three years ago, cuz three years is a very long time and especially in the age of Covid. So you may want to reassess your financial situation and see where you’re currently at.

Um, are you able to. Make the same payments that you were making then, um, has your, uh, job situation changed? Has your financial situation changed? Has your living situation changed? Do you now have kids? Are you now married? Are you divorced? There’s so many things that you know, you should think about to recap, to see, um, what has changed in the past three years.

And once you do that, you can kind of get an idea of. Where you currently stand, and I feel like that is gonna be the. Number one most important thing to do as we’re waiting for this resume to happen, figure out where you are financially. And so, um, you know, have you started budgeting? If not, you might wanna start, if you have to start doing student loan payments.

Um, do, are there ways that you’re currently making money that you weren’t making money, um, before? So just think about everything as a whole. Okay? Now, once you. Take inventory and see how far you’ve come in three years. Um, now it’s time to see if that aligns with the current student loan repayment plan that you’re on.

So, yes, it’s gonna take you either reaching out to your servicer or going to the website again after three long years and figuring out what payment plan you are on, and if that still aligns now. I highly recommend reaching out to the servicer and asking, because when I did this, back when I thought that the payments were gonna resume earlier, actually June of this year, um, I had reached out last year and I said, you know what, what am I looking at?

And they actually told me that I wouldn’t have to start making payments immediately after the re. Uh, after they’re set to resume, because of the type of payment plan I was on, I still had another few months to get my ducks in a row. And so you wanna reach out and just see where you stand in that regard.

And if it’s not feasible for you, um, budget wise, or if you do not have the same money or things have changed drastically, make sure that you communicate that to your servicer and see what other options they have. Keep in mind that all of the. Original options that you had for your student loan repayments are still in place.

Um, and so if you need to get on a lower payment plan or you need to use forbearance, or you need to do any of those things, make sure that your service. You’re talking to your servicer so that way they can give you all the options that are available to you. Also, you may be eligible to take advantage of forgiveness.

Um, there are still student loan forgiveness programs that were in effect pre C O V I D that are still going to exist. So make sure that you’re exploring all of your options when it comes to your student loans. And the only way to do that is to talk to your servicer. So make sure you do that. Also you wanna think about.

How student loans play into your overall debt picture, right? So even if payments do resume, how does that look like? Have you, um, you know, spent more on credit cards where the interest rates are higher? Did you get a new car? You know, all types of things. See how your student loans play a part in your.

Bigger financial picture and your debt payoff plan, do they require extra payments right now, or should those extra payments be made elsewhere? You know, so start thinking about those things as we’re waiting for this resume to happen in October. And just remember that once interest starts accumulating in September, um, Now you’re going to have to start paying that interest as well.

Now, if you had listened to the podcast or listened to me on social media during covid, I was really urging people if they didn’t have any other high interest debt, to keep making those payments because, and were able to, to keep making those payments because you were. Able to pay down your loan interest free.

So now, starting in September, that interest is gonna start, uh, accumulating. So one strategy you might wanna employ if you can, is to pay down as much as possible before September, so that way you won’t be, you won’t have as much interest that’s accumulating because as we know, interest is based on. How much principle you have.

And so if you can lower that principle as much as possible before September, then the interest that accrues won’t be, you know, as much as it it could be. So maybe think about that as we’re waiting for this as well. Another thing to keep in mind is that the Biden administration did say Friday that it will provide a 12 month on ramp period for borrowers reentering repayments.

So what does that mean? That means that you will not be reported to the credit bureaus, um, or be considered in default or referred to collection agencies for late missed or partial payments dur during that period. So keep that in mind as well. If you need to baby step into making those payments, you’ll not be penalized for the next 12 months.

So, like I said, Reach out to your servicer, making sure that it’s something that’s affordable. And then also, keep in mind this 12 month period that things will not be reported to the credit bureau. So if you do need to do a partial payment or you know, something came up and you know because life happens, um, then.

You will not be penalized for that as far as reporting to the agencies is concerned. But if that is the case, I still highly recommend contacting your servicer. Um, you will, uh, receive bill statements from your loan servicer a few weeks before they restart the payment. So don’t think that it’s gonna be like tomorrow.

And they’re gonna be like, oh my gosh, you owe us money. No, they do have to let you know that you do have this payment coming up, so expect to see statements or if you used to get an email, make sure you’re still set up for that and be on the lookout for those statements so you can see how much you’re going to have to pay.

Another thing to keep in mind is that. If you had automatic debits set up, you, you will have to go back in and reauthorize those, so it’s not gonna automatically start charging you again. If you did have automatic payments set up, you do have to go in and. Reset that up and reauthorized them to do that.

Um, so don’t be, don’t be scared of that either. Um, they’re not just gonna start pulling money from you. So if you didn’t get anything else from this episode, the key points to remember are payments resume. Well, the Supreme Court struck down the student loan cancellation, so there’s no more of that.

Payments restart in October. Interest restarts in September. Pay down as much as you can if you can, um, before September to avoid being, um, to avoid having interest charged on your entire amount. Reach out to your loan. Take inventory of. Where you are with your financial situation, see what you can afford, see what you can do.

Then reach out to your loan servicer to see how much your payment’s gonna be when it restarts with them, or if you need to make any changes to your repayment cadence. Um, you can do so with them. Also keep in mind that there’s a 12 month on ramp period where they cannot report any negative actions to the credit bureaus.

So if there are any late payments or um, you know, you’re not able to pay or have to make a partial payment, that is not going to count against you. Um, so. Also keep in mind that bill statements will come. So they’re not just going to say, Hey, tomorrow you owe us this amount, amount. So be on the lookout in your mail or in your email.

And also they will not just start taking payments from you, even if you had automatic draft set up. You have to reset those up. So those are just some things to keep in mind as we head into student loan repayment coming. Up in October. I am so, personally, I’m so bummed about not getting the debt relief.

Um, and it’s unfortunate, but this is also, I will plug why we need to vote and make sure that we have people working in the best interests of ourselves and our community, um, in those positions. I’m not gonna get. Too political, but I just wanna urge people to vote because these people were appointed into these roles by people that you voted for.

So, um, keep that in mind as elections come around, um, you know, There’s so many things that I can hit on in this episode, but I wanted to keep it focused on our student loan payments and where we’re at with that and what that looks like now. So keep these things in mind and as you go forth, if you need any help with any of this, um, stuff that I mentioned in the episode.

Whether it is taking stock of where you are financially, you know, starting to budget, what have you, those are services I do offer on a one-to-one basis. So feel free to go to my website and find out more information. I’ll make sure I put a link in the show notes for that. So I. Would love to help you figure out what this debt payoff is gonna look like.

So thank you so much for joining me on the Money Talk with Tiff podcast. If you want your question answered on Tiffany’s take, go to money talk with t.com/ask Tiffany, and I’ll be happy to do so. But until next week. Bye.

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