The plan was enacted under authorities granted the executive branch during declared public emergencies by the Higher Education Relief Opportunities for Students (HEROES) Act of 2003. In the Act, Congress gives the Education Secretary authority to “waive or modify” any provision of federal student loan programs during national emergencies. The Department of Education, under the COVID-19 emergency declaration, sought to modify current debt discharge rules to cancel debt for people meeting certain income thresholds. The Court ruled the modification was more broad and impactful than the HEROES Act was meant to allow and would cause material financial harm to the states pursuing the claim.
Our systems of higher education continue to perpetuate barriers to access based on socioeconomic status and impact borrowers for decades after they leave college. The high costs most people must pay to earn bachelors, masters, and doctoral degrees prevent many from pursuing higher education. Those who must manage the costs by incurring debt are burdened with payments which limit their ability to buy a home, invest in retirement, obtain medical services, and meet many other basic needs. Today’s decision by the court reaffirms the vital importance of community college baccalaureate programs, tuition-free promise programs, tuition-free noncredit programs, affordable student housing, and the many basic needs services we provide to ensure every student has access to a high quality education and upward economic mobility. The public value our colleges provide, especially for underserved communities, is extraordinary.
While the Department of Education may pursue other means of reducing individual student loan debt, at this time, we cannot anticipate any broad program to discharge debt. Further, federal student loans will resume accruing interest on September 1, 2023 and borrowers must resume payments on federal student loans in October. The Department of Education has announced a three-month grace period for individuals who miss payments after the repayment pause ends in October. This means individuals who do not make timely payments beginning in October will not be reported to credit agencies as delinquent during the grace period.
One of the student loan discharge programs administered by the Department of Education is the Public Service Loan Forgiveness (PSLF) program. As a public education institution, working for the San Diego Community College District may qualify you for public service loan forgiveness. The PSLF program was created by Congress to recognize the invaluable contributions of public employees and encourage more people to pursue public employment. The PSLF Program forgives the remaining balance on Direct Loans after a borrower has made 120 qualifying monthly payments under a qualifying repayment plan while working full-time or as an adjunct faculty member for a qualifying employer, like SDCCD. If you have outstanding student loan debt, we recommend you visit studentaid.gov/pslf to determine whether you are eligible for loan forgiveness.
Finally, the Department of Education will continue the regulatory process to establish a new income-driven repayment plan that caps monthly loan payments at 5% of discretionary income for undergraduate loans, raises the non-discretionary income threshold to ensure individuals making minimum wage are not required to make payments, forgives loan balances of $12,000 or less once a borrower has made 120 payments, and provides for unpaid monthly interest so loan balances will not increase over time. Information on the new plan will be available at studentaid.gov once it is implemented. Employees can email hrpayroll@sdccd.edu for assistance with employment verification for the PSLF program.
Gregory Smith
Acting Chancellor of the San Diego Community College District