3 Student Loan Forgiveness Updates For 3 Critical Initiatives

Student loan forgiveness continues to evolve as a combination of legal and policy changes impact debt relief eligibility and timelines under several Biden administration programs. Here are three important updates that borrowers should be aware of.

Supreme Court to Hear Arguments on Biden’s Student Loan Forgiveness Plan This Month

President Biden unveiled a massive, one-time student loan forgiveness initiative last fall. Under the plan, up to 40 million borrowers could be eligible for $10,000 or $20,000 in student loan debt relief. Millions of borrowers were approved for student loan forgiveness across all 50 states.

But shortly after the application portal went live, the program was inundated with legal challenges, and two federal courts ended up blocking relief. Now, the Supreme Court has agreed to consider appeals from the Biden administration.

Last week, the challengers filed legal briefs with the court outlining their arguments. The Biden administration had filed its own brief earlier in January. Justice Department attorneys now have an opportunity to submit a reply brief to the challengers’ arguments. And the Supreme Court will hear oral arguments at a blockbuster hearing scheduled for February 28th. A decision is expected by June.

Key Court Hearing Set for Student Debt Relief Settlement

Last fall, a federal court approved a substantial settlement agreement to resolve a class action lawsuit brought by student loan borrowers against the US Department of Education. The borrowers had argued that the government had improperly stalled, delayed, or denied relief for borrowers who submitted applications under the Borrower Defense to Repayment program, which can provide student loan cancellation for borrowers who were defrauded by their schools through misrepresentations or false promises. The case is Sweet v. Cardona (formerly Sweet v. DeVos).

Under the approved settlement agreement, the Education Department would discharge $6 billion in federal student loan debt for over 200,000 borrowers who submitted Borrower Defense applications and attended a school listed on a roster of dozens of institutions covered by the settlement. Some borrowers can also receive refunds of payments and credit repairs. Implementation of the debt relief was set to start last month.

But three institutions on the Sweet v. Cardona the school roster filed an appeal and sought to block the relief. In response, a federal judge temporarily halted relief under the approved settlement agreement while it considered the schools’ request for a stay. The court has scheduled a hearing for February 15, and the court may decide at that time whether implementation can proceed.

“We are confident the facts will prevail and that relief for our clients is imminent,” said Eileen Connor, President and Director of the Project on Predatory Student Lending, the organization representing the class of student loan borrowers.

Biden Student Loan Forgiveness Adjustment Expands Eligibility for Parent Borrowers

The Biden administration is in the process of launching the IDR Account Adjustment, a one-time initiative that will allow the Education Department to credit borrowers with past loan periods towards loan forgiveness under income-driven repayment (IDR) plans and Public Service Loan Forgiveness ( PSLF).

Parent PLUS loans, a type of federal loan issued to the parent of an undergraduate student, have historically been excluded from many IDR program initiatives, and also were left out of the Limited PSLF Waiver, a one-time program similar to the IDR Account Adjustment that ended last fall. But the Education Department announced that Parent PLUS loans may now benefit from the IDR Account Adjustment, potentially allowing parent borrowers to advance their progress towards student loan forgiveness.

Borrowers should review the current available guidance on the IDR Account Adjustment to determine what steps may be necessary to qualify.

Further Student Loan Forgiveness Reading

What Biden’s Latest Covid Move Means For Student Loan Programs, Including Loan Forgiveness

Here’s Who Has Been Approved For Student Loan Forgiveness Under Biden’s Plan

Student Loan Forgiveness: These Deferment And Forbearance Periods May Count

Your Student Loan Forgiveness Is Getting Delayed, And It May Get Worse