Student loan forgiveness comes before SCOTUS
+ an update on my "low buy" year
Hi everyone,
I was on CTV Your Morning, a Canadian morning show, earlier this week to talk about the rise of de-influencing. I was also a guest on a Canadian radio show last week talking about the same topic (am I a de-influencing influencer?). I’m huge in Canada, I guess!
For Fortune this week, I wrote about $1 million not being enough to comfortably retire (lol), questions to ask if you want to find a reputable financial advisor, how the four-day workweek would benefit older workers, and how to invest on a tight budget (the advice will be familiar to readers of this newsletter!). Also: A lot of people’s retirement account balances fell last year. But we knew that.
I also covered the Supreme Court hearing on President Biden’s widespread student loan forgiveness plan—my takeaways from that below!
In this week’s issue:
1. SCOTUS skeptical of student loan forgiveness
2. Low buy year update
3. Links
SCOTUS skeptical of student loan forgiveness
This week, the U.S. Supreme Court finally heard oral arguments in two cases brought against President Joe Biden’s widespread student loan forgiveness plan. I’ve been following Biden’s student loan actions closely, and have interviewed a number of lawyers/policy analysts/other experts since he announced the plan to forgive $10,000 to $20,000 in debt for most federal borrowers.
Overall, the oral arguments went about as expected. The conservative justices—there are six of them—were largely skeptical of the plan, and their questions reflected that. They asked about the plan being an overreach of executive power (because Congress was not involved), about fairness, and about precedent.
On the flip side, the more liberal justices—there are three—largely seemed supportive of the forgiveness plan, and skeptical that the challengers even have standing to sue. If the forgiveness plan is upheld, I think it will be for that reason—that the justices decided the six conservative states suing and the two individuals suing don’t actually have standing and therefore cannot bring their suits. That’s been the case for some of the other lawsuits brought against the plan: Challengers have to prove they will be materially harmed by student loan forgiveness. Justice Amy Coney Barrett, appointed by former President Donald Trump, also questioned the current challengers’ standing. We will have to wait and see what happens with that.
This is all despite the fact that every lawyer and analyst I’ve spoken to—including those who lean more conservative—say that it is likely within the Biden administration’s purview to implement the forgiveness under the HEROES Act.
The HEROES Act was implemented (by Congress, as Justice Sonia Sotomayor pointed out) after 9/11. It allows the Secretary of Education to make changes to federal student loan payments in the instance of a national emergency. And if you somehow forgot, the U.S., indeed, has been under a state of national emergency for the past three years. The HEROES Act explicitly allows the Education Secretary to “waive or modify” federal student loan repayment terms to prevent borrowers from incurring additional financial hardship.
It is also the authority that the Trump administration used to implement the pause on federal student loan payments at the start of the COVID-19 pandemic, and no one thought it was an overreach then (in fact, the pause continues to this day).
That said, conservative groups say they are worried this sets a precedent for the executive branch to take unilateral action at such a grand scale. What could it do in the future? The Biden administration, in turn, says the scale of the forgiveness program is so grand—it’s estimated to cost upwards of $400 billion—because student loans themselves are such a huge problem in the U.S. Basically, it’s the cost of doing business.
All that said, legal experts are advising borrowers to plan on loan cancelation being blocked by the court. If that were to happen, you’d want to pay off whatever you were able to afford while interest is still set at 0%; there are also other forgiveness programs that aren’t (currently, anyway) on the chopping block, including income-driven repayment forgiveness after 20 years and Public Service Loan Forgiveness (PSLF). We should receive a decision from the court in May or June.
If you’re looking for a good resource for following along with student loan news, getting advice, or commiserating with other borrowers, I can’t recommend the StudentLoans subreddit enough (there’s an equally good PSLF-specific subreddit). The mods and other commenters are so smart and do a great job of keeping up with all of the latest developments, beyond forgiveness. I’ve learned a lot from this sub!
Low buy year update
After a pretty successful January of low spending, February wasn’t…great. I bought a few things off of the list I made in January, made a few impulse purchases, went out to eat a lot more, etc. But I’m committed to getting back on track in March!
Some new(ish) rules I’m setting for myself this month:
No Amazon purchases. This isn’t a huge issue for me because I try to avoid using Amazon as much as possible, but I do want to be more intentional about not using it this month.
Trim subscriptions. At this point, cancelling unused subscriptions is as clichéd personal finance advice as not buying lattes, but hey…it’s a cliché for a reason.
Keep cooking at home. I made some pretty good meals at home in February and want to keep that up. If you have good vegetarian or pescatarian recipes send them my way!
Reduce drinking again. Self explanatory.
Change credit card statement dates. I want to see if I can get my main credit card statement period changed to a normal calendar month, rather than the 12th of one month to the 12th of the next. It’s confusing!
I’m also thinking about looking for a financial advisor. As I mentioned, I wrote about what to look for in one here, and while I don’t have huge money questions/pain points, I am curious how a professional might be able to help me.
All this said, given my low spending in January, I managed to save (for me) a fairly significant amount of money! So I’m proud of myself.
Links
Looks like the WSJ read my newsletter from a few weeks back on adding friction to your finances ;)
My colleague Ivana Pino asked ChatGPT and a human financial advisor for advice on buying a home.
You can now buy a fraction of a house. Should you?
Let’s talk about living paycheck-to-paycheck when you earn six figures.
That’s it for now. Have a great weekend,
A
P.S. If you know someone who would like this newsletter, please forward it along!
P.S.S. Thanks Christopher Skinner for the illustrations!