The student loan pause is set to end in a matter of days.
For more than three years, millions of federal student loan borrowers have had their payments paused, interest frozen, and collections suspended. But student loan payments are set to resume after August 31.
In the meantime, advocacy groups and elected officials are urging the Biden administration to move forward and quickly implement student loan forgiveness, even after the Supreme Court struck down President Biden’s sweeping debt cancellation plan last June.
Here’s the latest.
Student Loan Forgiveness Under One-Time Adjustment Set To Continue
The Biden administration is set to continue implementing student loan forgiveness under the IDR Account Adjustment. The one-time initiative is designed to provide borrowers with retroactive credit toward IDR loan forgiveness on 20- or 25-year terms, as well as toward Public Service Loan Forgiveness. The Supreme Court ruling from earlier this summer struck down a different loan forgiveness program, not the IDR Account Adjustment.
Last month, the Education Department announced that more than 800,000 borrowers qualify for student loan forgiveness under the adjustment, and many of those borrowers had their balances discharged in the last several weeks. More borrowers may be notified that they qualify for loan forgiveness under the adjustment in September.
Several conservative legal groups filed a legal challenge to the IDR Account Adjustment. But a federal district court judge in Michigan dismissed the case earlier in August on standing grounds. The groups are now appealing the dismissal to the Sixth Circuit Court of Appeals. So far, the appeals court has not issued a ruling.
Progressives Urge Biden To Quickly Establish New Student Loan Forgiveness Plan
Shortly after the Supreme Court struck down Biden’s mass student debt relief plan — which would have wiped out $10,000 or more for many federal student loan borrowers — President Biden announced the administration would be developing a backup plan. This “Plan B” will be established under the Higher Education Act, a different legal authority than the one that was the basis of Biden’s initial loan forgiveness program.
The process for creating a new student loan forgiveness plan will be long and tedious. Drafting regulations under the Higher Education Act often requires multiple rounds of public hearings and comment periods in order to comply with federal law.
But progressive Democrats are urging Biden to act more quickly. Last week, 87 House and Senate Democrats sent a letter to Biden, imploring him to move as fast as possible in implementing the new student loan forgiveness plan.
“We are extremely disappointed and concerned that the Supreme Court substituted politics for the rule of law to deny as many as 43 million hard working Americans life-changing relief from crushing student loan debt,” wrote the lawmakers. “In the wake of this outrageous decision, we appreciate your announcement initiating a rulemaking under the Higher Education Act of 1965 to deliver on debt relief and write to urge you to swiftly carry out your commitment to working- and middle-class families, and cancel student debt by early 2024.”
The Biden administration did not immediately respond to the lawmakers’ requests. But the regulatory process under the Higher Education Act may not allow for the new student loan forgiveness plan to become available until later next year.
Activists Unveil New Student Loan Forgiveness Strategy
Meanwhile, student debt activists are trying a different approach. This week, the Debt Collective — a debtor’s union representing the interests of student loan borrowers — unveiled a process whereby borrowers can request individualized student loan forgiveness under the Higher Education Act by generating and submitting letters to the Education Department.
“This new tool creates a legal memo requesting that the Department of Education cancel a borrower’s federal student loans, invoking Higher Education Act of 1965 authority to ‘compromise, settle, waive or release’ all federal student debts,” said the Debt Collective in a statement.
The effort mirrors similar collective action undertaken by student debt activists nearly a decade ago, when they urged borrowers to submit customizable, individualized requests for debt relief through Borrower Defense to Repayment, another federal student loan forgiveness pathway. Those efforts eventually resulted in the establishment of a formal application process for Borrower Defense relief. That, in turn, has resulted in billions of dollars in loan forgiveness for borrowers.
“The reality is, the Education Department has the authority to eliminate a person’s federal student debts if they want to,” said Braxton Brewington, spokesperson for the Debt Collective, in a statement. “We know because they’ve done it before. Whether they choose to cancel people’s debts or not is completely up to their political rationale.”
It is unclear if the Education Department will review the submitted legal memos, or consider providing loan forgiveness to borrowers before the new plan is officially available.
Further Student Loan Forgiveness Reading
Student Loan Update: Only Days To Act On Some Key Repayment And Forgiveness Deadlines
Mass Student Loan Forgiveness Emails Sent As Challengers Appeal To Block Debt Relief
Student Loan Forgiveness Update: What The Latest Court Victory Means For Borrowers
Student Loan Forgiveness Just Got Easier For These Borrowers
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