2023-08-15 01:36:02
Starting Monday, hundreds of thousands of federal student loan borrowers will receive emails from their servicers titled “Your student loans have been discharged.”
The notices will be filed as part of the Biden administration’s previously announced effort to cancel the debts of 804,000 borrowers who qualified for forgiveness under their payment plans but have yet to receive it due to what officials described as an administrative failure. .
The emails were due to start appearing Monday, according to a copy of the borrowers’ confirmation notices obtained exclusively by ABC News.
More than 800,000 borrowers are expected to be notified of some relief in the coming weeks.
About 614,000 people are expected to see their student loan debt paid off in full, while others may be left with loans they took out at different times.
The forgiveness is aimed at people who enroll in income-based repayment (IDR) plans, which allow the federal government to pay off student loan debt after payments have been made for 20 or 25 years, depending on the plan.
But due to well-documented errors in tracking payments, many borrowers on IDR plans have been stuck paying past their payment due dates, with no forgiveness in sight.
President Joe Biden, whose administration has faced legal setbacks and conservative criticism for trying to further eliminate student loans, announced the start of these account adjustments as a step toward repairing what he called a student loan system that it does not work.
“Under these plans, if the borrower makes payments in 20- or 25-year terms, the remaining balances on their loans will be forgiven. But due to clerical errors and the failures of a student loan system that began long before I took office, more than 804,000 people are dead,” Biden said in a statement to ABC News. Borrowers never got the credit they were given and didn’t see the forgiveness they were promised, even after decades of payments.
“I was determined to correct this mistake,” he said.
Borrowers affected by IDR plans should expect to receive emails from loan servicers with the subject line “Your student loans have been forgiven” and the message “Congratulations! The Biden-Harris Administration has forgiven your federal student loan(s) listed below along with [servicer name] entirely.”
Education Secretary Miguel Cardona speaks during the K-12 Back-to-School Cybersecurity Summit in the East Room of the White House, on August 8, 2023.Brendan Smialowski/AFP via Getty Images
Administration officials could not provide an exact timetable for how many borrowers will receive their benefits and when, citing the complex nature of reviewing each individual loan, but said the process would be completed within weeks.
There is also the possibility of lawsuits to obstruct debt cancellation, although a recent lawsuit, filed by the new Civil Liberties Alliance on behalf of the Cato Institute and the Mackinac Center for Public Policy, arguing that the Department of Education was overreaching its authority, was recently dismissed by a US District Court judge in Michigan.
The Department of Education is currently moving forward with a plan to pay off the debts of eligible borrowers.
“We defend borrowers who did everything right, but whose progress toward forgiveness was not counted because of past administrative failures that the Biden-Harris team worked tirelessly to correct,” Education Secretary Miguel Cardona said in a statement.
Debt relief advocates on Monday called for “delayed justice.”
“The Biden administration has kept its last promise to the 800,000 people who have failed time and time again because the student loan system has collapsed. And for these borrowers, the prospect of deferred justice is life-changing,” said Persis Yu. , Executive Vice President and Student Administrative Advisor. Borrower Protection Center.
Critics such as Rep. Virginia Fox, chair of the Education and Workforce Committee, have called the relief an abuse of taxpayer money.
The Biden administration’s blatant political attempt to circumvent the Supreme Court is shameful. “The Biden administration tramples on the rule of law, hurts borrowers and abuses taxpayers to make headlines,” he said in a statement when the policy was first announced last month.
In all, the reforms to the Education Department’s IDR plans would result in $39 billion in automatic debt forgiveness, ABC News previously reported.
Debt relief advocates called the two “delayed justice.”
“The Biden administration has kept its last promise to the 800,000 people who have failed time and time again because the student loan system has collapsed. And for these borrowers, the prospect of deferred justice is life-changing,” said Persis Yu. , Executive Vice President and Student Administrative Advisor. Borrower Protection Center.
Critics such as Republican Rep. Virginia Fox, chair of the House Workforce and Education Committee, have called the permissiveness an abuse of taxpayer money.
The Biden administration’s blatant political attempt to circumvent the Supreme Court is shameful. “The Biden administration tramples on the rule of law, hurts borrowers and abuses taxpayers to make headlines,” he said in a statement when the policy was announced last month.
The effort is part of a wave of changes to federal loan programs that officials say have not delayed the end of the deal. That includes $45 billion in forgiveness for people enrolled in public service loan forgiveness who didn’t get the debt relief they were promised and $22 billion for borrowers who were scammed by for-profit colleges.
In all, the debt relief announced by the Biden administration has so far reached $116.6 billion for more than 3.4 million borrowers, according to the Department of Education.
In June, the Supreme Court rejected Biden’s program for massive cancellation of student loan debt, with a majority of justices ruling that he had exceeded his authority.
That program, promised by the Biden campaign, would have canceled between $1,000 and $20,000 in federal loans for people with incomes below a certain income.
Since then, the White House has announced a new IDR plan that would reduce monthly payments to 5% of a person’s discretionary income, up from 10%, and reduce the forgiveness program to 10 years of payments, from 20 or 25, if the loan down payment is less than $12,000.
The Department of Education is also in the process of drawing up rules to try again for debt relief through a different law, the Higher Education Act, though it is likely to face legal challenges as well.
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