Supreme Court Reignites Student Loan Forgiveness Case: What Borrowers Must Know in 2025

Wondering what the Supreme Court’s move means for your student loans? If you submitted a borrower-defense claim—or you’re considering one—you might be wondering what happens next now that the Supreme Court has agreed to review the case.

But that’s not the only recent shift affecting student borrowers: the CFPB has also pulled back on enforcement of Buy Now, Pay Later (BNPL) products, a credit tool widely used by students.

In this post, we’ll break down the borrower-defense timeline, explain what the ruling could change, and look at how regulatory shifts might leave student consumers more exposed than ever.

Key takeaways

• The Supreme Court is reviewing a massive borrower-defense loan forgiveness settlement
• BNPL regulation is being deprioritized, potentially weakening consumer protections for students using these services
• Borrowers should track both legal and regulatory updates to stay protected

What is borrower defense to repayment?

Borrower defense to repayment is a federal rule that allows student loan borrowers to request a loan discharge if their school misled them or committed fraud. This often applies to students who attended for-profit colleges and were promised job placement, accreditation, or program quality that didn’t match reality.

You may qualify for discharge if:

• Your school misrepresented costs, graduation rates, or career outcomes
• You were enrolled through deceptive marketing
• Your school broke a contract they made with students
• Your program lost accreditation without notice
• Your school closed before you graduated

TuitionHero Tip

Already filed a claim? You can check your status at StudentAid.gov.

Why is the Supreme Court involved now?

Student loan borrowers have long been able to try and discharge their loans by alleging their schools of misconduct. However, borrowers previously had to default on their loans first before applying for borrower defense to repayment.

A 2022 Biden-era rule changed that, allowing borrowers to apply for discharge before defaulting on their loans.

While that change was widely expected to open the doors for more loan discharges, a 2023 court ruling blocked its implementation, finding that the Biden administration overstepped its authority.

After the Biden administration appealed, the case ended up in the hands of the Supreme Court. While the Trump administration requested a brief delay to review the case, the legal process is once again underway.

Until a ruling is issued, some loan discharges may be delayed or paused.

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Timeline of key events

TuitionHero Tip

Your claim is still valid. You don’t need to resubmit even if discharges are delayed.

What should borrowers do while they wait?

While the case is pending, here’s what you can do:

• Ensure your contact info is current with your servicer and on StudentAid.gov.
• Save your borrower defense application and any email confirmations.
• Check loan balances monthly and look out for updates or suspicious charges.
• Explore temporary options like forbearance, deferment, or IDR plans if needed.

BNPL regulation and why it matters for students

At the same time as the Court is reviewing student loan forgiveness, another major shift is happening in student finance—but it’s getting less attention.

In May 2025, the Consumer Financial Protection Bureau (CFPB) announced that it would de-prioritize the enforcement of certain regulations regarding Buy Now, Pay Later (BNPL) products.

This means that the CFPB won’t actively pursue rules that would give BNPL users the same protections as credit card users, like dispute rights and transparent billing statements.

This matters because:

• BNPL use among students is growing. Over 20% of borrowers with credit records used BNPL by 2022.
• Students use BNPL for health, education, groceries, and travel.
• Risks include hidden fees, unclear credit terms, and debt stacking.
• BNPL loans often don’t show up on credit reports, leaving financial blind spots.

Without strong regulatory oversight, students who use BNPL for everyday expenses may be more vulnerable to financial harm.

TuitionHero Tip

If you're using BNPL, monitor your spending carefully and set calendar reminders for payments—BNPL platforms rarely offer grace periods.

What could the Supreme Court ruling change?

The Court could issue a broad or narrow decision, but here are three likely outcomes:

1. Rule Changes Upheld: Students will find it easier to apply for borrower defense to repayment.
2. Rule Changes Blocked: Borrower defense to repayment rules will revert to pre-Biden changes.
3. Modified Outcome: The Supreme Court may uphold the rule change in certain scenarios, but not in others.

Regardless, the decision could reshape borrower defense rules for years to come.

TuitionHero tips for managing uncertainty

• Check your loan details monthly—even paused loans can accrue interest.
• Bookmark the Federal Student Aid Newsroom for official updates.
• Don’t trust third-party services that charge for forgiveness help. It’s always free.
• Compare BNPL platforms carefully before using them—some charge late fees up to 30%.

Why trust TuitionHero

At TuitionHero, we help you find the best private student loans by comparing top lenders and breaking down eligibility, interest rates, and repayment options. Whether you need additional funding beyond federal aid or a loan without a cosigner, we simplify the process. We also provide expert insights on refinancing, FAFSA assistance, scholarships, and student credit cards to support your financial success.

Frequently asked questions (FAQ)

Should I still submit a borrower defense claim?

Yes. New claims are still being accepted and reviewed, although applications subject to the rule may not be adjudicated until the court case is resolved.

Will the Court’s decision affect other forgiveness programs?

No, this case is specific to borrower defense—not general student loan cancellation.

How does the CFPB’s BNPL decision affect me?

If you use BNPL to buy school supplies or food, you may no longer have dispute or refund protections.

Do I need to make payments during the legal delay?

Not if your loans are in forbearance, but check your servicer’s terms.

Could BNPL affect my credit score?

Sometimes. Most BNPL loans don’t report to credit bureaus unless you're late.

Final thoughts

While the Supreme Court deliberates over one of the biggest forgiveness cases in student loan history, student financial protections are being tested on multiple fronts. With the CFPB stepping back from BNPL regulation and key forgiveness programs in limbo, now is the time to stay alert.

Make sure your paperwork is in order, check your balances regularly, and use financial tools carefully. Whether it’s a federal loan or a BNPL app, understanding your obligations can help you stay in control, and TuitionHero is here to help you every step of the way.

Source

• U.S. Shoppers Turn To Buy Now, Pay Later For Groceries As High Costs Bite
• CFPB deprioritizing ‘buy now, pay later’ enforcement actions
• CFPB Releases Report Highlighting Consumer Use of Buy Now, Pay Later Products
• CFPB won’t prioritize BNPL enforcement | Consumer Finance Monitor
• Borrowers with poor credit ratings make up majority of BNPL borrowers | Consumer Finance Monitor