Student-loan forgiveness is about to begin for thousands of borrowers. On Monday, student-loan companies are scheduled to start discharging the debt of 804,000 borrowers who have qualified for $39 billion in debt relief.
This action is part of the initial phase of the Education Department’s one-time account adjustment for income-driven repayment plans.
The department announced on July 14 that borrowers who had made the required 20 or 25 years of qualifying payments on income-driven repayment plans would be notified about their debt cancellation.
Thirty days later, their servicers would commence discharging their loans.
“At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable,” said Under Secretary of Education James Kvaal in a statement.
“Today we are upholding the commitment we made to borrowers who have completed decades of repayment.”
The department stated it would review borrowers’ accounts every two months to determine their eligibility for relief, though the future of these discharges remains uncertain.
The groups contended that, as nonprofits, they would be disadvantaged in their recruitment efforts through the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.
While the groups requested the court to halt the relief before Monday, when discharges were set to begin, the judge has yet to make a ruling.
If the court grants a pause on the relief, it is unclear how this would impact the 804,000 borrowers who were starting to receive their discharges.
An Education Department spokesperson commented at the time of the lawsuit’s filing that it was “nothing but a desperate attempt from right-wing special interests to keep hundreds of thousands of borrowers in debt, even though these borrowers have earned the forgiveness promised through income-driven repayment plans.”
The statement continued: “We are not going to back down or give an inch when it comes to defending working families.”
As reported previously by Insider, the uncertainty surrounding the relief and ongoing legal battles leave borrowers in a state of limbo, especially with federal student-loan payments set to resume in October after a pause of over three years.
One borrower, who received an email indicating that his loans qualified for relief due to the account adjustment, expressed his frustration, saying that the recent lawsuit made him “very, very bummed” because a small part of him had hoped that his loans would finally be forgiven.
