The Supreme Court Decision to Strike Down Biden’s Loan Forgiveness Creates Credit Card Challenges for Young Doctors

The Supreme Court Decision to Strike Down Biden’s Loan Forgiveness Creates Credit Card Challenges for Young Doctors


According to Federal Student Aid 2023 statistics, more than $500 billion in federal student loans is carried by borrowers between the ages of 25 and 34. President Biden’s Student Loan Forgiveness Program, announced in August 2022, was set to wipe out nearly $430 billion in debt.

Student loan debt in the United States is currently held by individuals of all ages, ranging from younger people to retirees. 

Despite improving inflation rates, Americans are finding it difficult to their households. Among these citizens are young doctors, who are now increasingly turning to credit cards for debt. Unlike other students, doctors have a unique financial situation. By the time they start their careers, they carry a high level of debt, since they have to pay both undergraduate and medical school loans.

COVID-19 Didn’t Help Student Borrowers

To make things worse, student loan repayments suffered a tremendous setback since the start of the COVID pandemic. While most federal loans are currently in forbearance, the students must restart their monthly payments in October 2023. Americans hoped that they would see this forgiveness, but it was not approved. The three-year long pause is about to end and there are significant balances still to be paid.

In the Student Loan Forgiveness Program, $20,000 of federal student debt would have been forgiven for millions of Americans. But there was an important question: Did President Biden have the authority to wipe away hundreds of millions of dollars? Or had Congress given this authority to the President? According to the American Education Act, the Secretary of Education does have the power to “waive or modify” the regulatory provisions related to the financial assistance programs.

In a 6-3 decision, the U.S. Supreme Court ruled against President Biden’s student loan relief program, crushing the hopes of more than 40 million borrowers in the U.S. It was decided the 2003 Heroes Act did not authorize Biden’s debt forgiveness plan, and his administration could provide no solid justification to use this Act for spending. 

Chief Justice John Roberts said about the decision: “Our precedent — old and new — requires that Congress speak clearly before a Department [of Education] secretary can unilaterally alter large sections of the American economy.” 

The Act, however, had been used previously to suspend loan repayments. It would not have been the first time students were provided with debt relief. President Donald Trump announced a suspension of debt payments due to the COVID-19 pandemic. According to the Washington Post, more than 26 million people had already signed up for the Biden loan relief program before it was challenged in court.

With the 2024 election approaching, President Biden has vowed to try again to use all the tools at his disposal to help U.S. citizens with their student loans. According to the President, millions of Americans in this country feel disappointed, discouraged, and angry because of the Supreme Court’s decision. 

Doctors in Debt

Young doctors must explore multiple finance options to make ends meet. Thankfully, credit cards not only support them with quick financing but also provide benefits in the form of cash back and bonuses. The holders of many credit cards are not subject to any annual fees. This makes credit cards a desirable option for young doctors.

It may seem like doctors are bringing in a lot of money. However, the money still feels tight, considering that a significant part of their salary is spent on debt repayments. For young doctors to jump through financial hoops, they must research before choosing financing. In the case of credit cards, they should consider a low-interest card that offers rewards and online transaction services.

Careful Planning

Without the Student Loan Forgiveness Program in place, young doctors must create a cash flow strategy. It may include setting milestones and paying off one debt at a time. Credit cards can play a significant role in the success of these strategies, but that use requires critical thinking, planning, and patience.

Strategies like credit card consolidation are also helping young doctors manage debt while maintaining their lifestyles. Rolling multiple credit card bills or other loan payments into one payment makes it easier to manage the payments. But mismanagement at any point could lead to a toxic accumulation of debt.

Young doctors should look for credit cards that include introductory and ongoing Annual Percentage Rate (APR) and no late penalties. With no chance for these professionals to escape student loan debt, they must make wise financial decisions. They are trying to live a lifestyle they deferred due to longer training time, gap years, and rising living costs. These doctors can plan their budgets more effectively by splitting their income into the following categories: basic necessities, debt payments, savings, professional expenses, household expenses, and entertainment.

A Way Forward

Had the forgiveness program been successful, millions of young doctors would have benefited. In May 2023, the Marquette Law School conducted a poll which found 69% of independents and 87% of Democrats favored the proposal, compared to 31% of the Republicans. While President Biden refused to give people false hope, he promised new repayment options for the financially “vulnerable” borrowers who might miss the payments that they owe to the federal government.

Until then, credit cards rule the day. Besides cash back and rewards, credit cards can also be used to build and improve credit scores. This requires showing the financial institutions how well borrowers manage the credit. Doctors can use a simple spreadsheet to monitor how much they spend through credit cards and when the payments are due.

One doctor who asked to remain anonymous says, “I’ve used over 20 credit cards and rewards programs with my girlfriend and I to sign up for trips I could not have afforded otherwise. How [else] could I have afforded to have the lifestyle I’ve worked so hard for?”

In conclusion, people are looking for other finance options since they are not getting any relief from their student debt. In such a scenario, credit cards are a feasible option for financing needs.

This article was produced by Media Decision and syndicated by Wealth of Geeks.

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