A civil case against the effort is still in a judge’s hand’s….
— The program is aimed at compensating federal student loan borrowers for what administration officials have said were longstanding failures in how the Education Department and its contracted loan servicers have managed federal income-driven repayment programs.
— Those programs promise borrowers the opportunity to have their debts erased entirely after they make payments for either 20 or 25 years, depending on the plan. But relatively few borrowers have ever received forgiveness through income-driven repayment.
— Part of the problem, according to state and federal regulators, was that student loan servicers were improperly pushing borrowers into long-term forbearances that don’t qualify for credit toward loan forgiveness. In other cases, the Education Department did not properly track borrowers’ monthly payments over time.
— Flashback: The Education Department first announced in April 2022 that it planned to retroactively adjust borrower accounts to give credit for each month in which borrowers could have made a qualifying payment under an income-driven repayment plan, regardless of whether they did.
— Those updated payment counts have pushed some 804,000 borrowers over the threshold of 20 or 25 years of payments, entitling them to loan forgiveness under the plans. The Biden administration began sending notices about that relief to borrowers earlier this summer, announcing it just weeks after its broader loan forgiveness program was struck down by the Supreme Court.
— Borrowers who are in line for the relief had until yesterday to opt out, and the Education Department has said it’ll begin carrying out the loan discharges as early as today.
— But legal threats loom over the program: Two conservative groups, the Cato Institute and Mackinac Center for Public Policy, have asked a federal judge to issue an immediate order blocking the loan forgiveness. The groups, which claim the relief could harm their recruitment efforts, argue the Biden administration is abusing its authority in retroactively awarding credit to borrowers.
— As of Sunday night, the federal judge overseeing the case had not yet ruled on the groups’ request. The organizations had asked the judge to rule before the loan discharges are set to begin today…..