Many borrowers of student loans are now making progress toward long-awaited debt relief. At least 200,000 debtors who were misled by the institutions they attended would receive $6 billion in debt relief as a result of a settlement that federal judge William Alsup approved last year. His decision was made on Friday night.
It has taken a while for this alleviation to arrive. The complaint was initially filed in 2019 when the plaintiffs claimed that the Education Department of former President Donald Trump had failed to process their borrower defense claims, which are claims borrowers can make if they think their institution has deceived them.
Since the lawsuit wasn’t resolved under Trump, President Joe Biden took it on and agreed to a settlement to give borrowers relief. But in January, two for-profit organizations, Lincoln Educational Services Corp. and American National University, as well as a nonprofit organization, Everglades College, Inc., filed notices to appeal Alsup’s ruling and halt the relief because they claimed they did not have enough time to object to being covered by the settlement. On Friday, Alsup denied their request.
The settlement permits a faster examination of an additional 64,000 borrower defense applications in addition to providing 200,000 borrowers with automatic relief. Alsup’s Friday judgment gives a significant, long-overdue victory for our clients and reinforces the fact that this settlement is legally sound, according to Eileen Connor, president and director of the Project on Predatory Student Lending, the firm that represented the plaintiffs.
Depending on the outcome of the US Supreme Court hearing on President Joe Biden’s student loan forgiveness program on Tuesday, millions of people who have student loan debt could have up to $20,000 of it canceled.
Federal student loan payments will restart following a pandemic-related hold that has been in place for nearly three years depending on how and when the justices rule. Payments will restart, according to the Biden administration, either at the end of August or 60 days after the case over the forgiveness program is concluded.
Prior to any debt forgiveness being issued, lower courts halted the implementation of the targeted student loan forgiveness scheme that Biden announced in August. Tuesday, the justices will listen to arguments in two instances involving the $400 billion program.
Six Republican-led states who claim they would suffer financial hardship if the forgiveness scheme went into force filed one lawsuit. Two borrowers in Texas who don’t entirely qualify for debt forgiveness under the scheme brought the other complaint.
According to the plaintiffs in both challenges, the administration lacks the jurisdiction, under the program’s planned guidelines, to erase the student loan debt. However, the Biden administration contends that a statute passed in 2003 gives the executive branch authority to cancel federal student loan debt in the case of a national emergency, such as the COVID-19 outbreak.
Over 2.6 million borrowers in Florida have a combined federal student loan debt of nearly $100.9 billion. The average borrower is under 35 years old. In the state, 20% of borrowers have debts between $20,000 and $40,000.
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When Student Loan Borrowers Receive Forgiveness?
There are around 43 million borrowers of federal student loans nationwide. Although the exact date of the Supreme Court’s judgment is unknown, the justices regularly publish their opinions before the conclusion of the current term, which is often in late June or early July.
It’s possible that the government will start canceling some debt fairly soon if the Supreme Court upholds the legality of the Biden administration’s student loan forgiveness program and permits it to proceed or if the court dismisses the challenges for lack of standing, or the legal right to bring the disputes in the first place.
Before a Texas lower court blocked the program statewide in November, the White House claims to have received 26 million applications, 16 million of which have been granted relief. Even after the Supreme Court has ruled, there may still be grounds for other legal challenges to be brought.
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