August 8, 2023
If you are one of the 804,000 student loan borrowers who made 20 or 25 years of payments and are under the impression you are going to have your federal student loan forgiven because of a new recalculation in the next few days – you should know – that might not happen.
Two groups just sued the Biden Administration over this plan which would forgive $39 billion of student loan debt. I told you all about that program in this video last month. The Education Department said it was going to adjust how it calculates student loan payments as a way to correct past errors and give borrowers credit for the payments they made when perhaps in the past those payments were not counted towards forgiveness. The first discharges of those remaining balances are set to happen in the next few days.
But last week two conservative think tanks filed this lawsuit accusing the president of introducing “unlawful loan cancellation schemes” “before the ink dried on the supreme court’s June 30 decision” which struck down his original student loan cancelation program. The lawsuit takes serious issue with these new recalculations of payments saying “no authority allows the department to count non-payments as payments.” The groups are asking a federal judge in the Eastern District of Michigan to stop any loans from being forgiven while this case goes through the legal process.
The Biden Administration says the new calculation method is simply addressing mismanagement, mistakes and the misleading of borrowers who have been paying all these years or were duped into the wrong income driven repayment programs. The Education Department called the suit “a desperate attempt from right wing special interests to keep hundreds of thousands of borrowers in debt.”
Now – as I said some of these loans were set to be forgiven in the next few days. It’s unclear if that’s going to happen. We’ll know more if and when the judge addresses this lawsuit.
Read the lawsuit here.
Read more about the program from the Education Department here.
