US roll back of student loan forgiveness hits borrowers, economy

Isabella Johnson, a psychologist in Arkansas, has a lot on her plate. She helps her son, who has some pre-existing health issues, pay his debt on both a bachelor’s and master’s degree. In August 2022, President Joe Biden announced his plan to forgive some student debt. For Johnson, that meant she could move forward with other large expenses. She just bought a house two weeks ago.

A series of rulings last week by the Supreme Court striking down the Biden administration’s student loan forgiveness programme has changed her situation. After the ruling, the mortgage lender backed out because now her income-to-debt ratio – which compares how much she owes each month with how much she earns – no longer works for them.Thanks to a little help from the promised debt relief, he was able to pay off his car and almost all of his wife’s, as well. The American dream of home ownership was within arm’s reach, said O’Connell. However, the Supreme Court’s decision has pushed that milestone further down the road.

The move is a major setback for Americans like Johnson and O’Connell.

While their situations are much different, they are indicative of the ripple effects on the greater economy. With a combined $1.7 trillion owed in student debt, everything from fairytale weddings to new cars are out the window.