Starting Monday, hundreds of thousands of federal student loan borrowers will receive emails from their servicers titled, “Your student loans have been waived.”
The notices will come as part of the Biden administration’s previously announced effort to cancel the debts of 804,000 borrowers who qualified for forgiveness under their repayment plans but have yet to receive them due to what officials described as an administrative failure.
The emails were due to begin appearing Monday, according to a copy of the borrowers’ confirmation notices obtained exclusively by ABC News.
More than 800,000 borrowers are expected to be notified of some relief in the coming weeks.
About 614,000 people are expected to have their student loan debt completely canceled, while others may have loans remaining that they took out at different times.
The forgiveness is aimed at people who enroll in income-based repayment (IDR) plans, which allow student loan debt to be written off by the federal government once payments have been made for 20 or 25 years, depending on the plan.
But because of well-documented errors in tracking payments, many borrowers on IDR plans have been left paying beyond their payment end dates, with no forgiveness in sight.
President Joe Biden, whose administration has faced legal setbacks and conservative criticism in seeking to further eliminate student loans, announced the beginning of these account adjustments as a step toward fixing what he called a broken student loan system.
“Under these plans, if the borrower makes 20- or 25-year installment payments, the remaining balances on their loans will be forgiven. But because of the administrative errors and failures of a student loan system that began long before I took office, more than 804,000 people are dead,” Biden said in a statement to ABC News. Borrowers never got the credit they were given and didn’t see the forgiveness they were promised – even after decades of payments.
“I was determined to right this wrong,” he said.
Borrowers affected by IDR plans should expect to receive emails from their loan service providers with the subject line “Your student loans have been forgiven” and the message “Congratulations! The Biden-Harris Administration has forgiven the federal student loan(s) listed below along with [servicer name] entirely.”
Administration officials were unable to provide an exact timeline for how many borrowers will receive their benefits and when, citing the complex nature of reviewing each individual loan, but said the process would be completed within weeks.
There is also the potential for lawsuits to obstruct debt discharge, despite a recent lawsuit brought by the new Civil Liberties Alliance on behalf of the Cato Institute and the Mackinac Center for Public Policy, arguing that the Department of Education is overstepping its authority, was recently dismissed by a US District Court judge in Michigan.
Currently, the Department of Education is moving forward with a plan to discharge debts owed to eligible borrowers.
“We stand for borrowers who did everything right, but whose progress toward forgiveness was uncounted by past administrative failures that the Biden-Harris team worked tirelessly to correct,” Education Secretary Miguel Cardona said in a statement.
In total, the reforms to the Department of Education’s IDR plans would result in $39 billion in automatic debt forgiveness, ABC News previously reported.
Debt relief advocates on Monday called for a “delayed justice.”
“The Biden administration has made good on its last promise to the 800,000 people who have failed time and time again because the student loan system has broken down. And for these borrowers, the prospect of deferred justice is life-changing,” said Persis Yu, executive vice president and student administrative advisor. Borrower Protection Center.
Critics like Rep. Virginia Fox, chair of the House Education and Workforce Committee, called the relief an abuse of taxpayer money.
“The Biden administration’s egregious political attempt to circumvent the Supreme Court is disgraceful. The Biden administration tramples on the rule of law, harms borrowers, and abuses taxpayers to make headlines,” she said in a statement when the policy was announced last month.
The effort is part of a wave of changes to federal loan programs that officials said have not delayed their end of the deal. That includes $45 billion in forgiveness for people enrolled in Public Service Loan Forgiveness who didn’t get the debt relief they were promised and $22 billion for borrowers who were defrauded by for-profit colleges.
In all, the debt relief announced by the Biden administration so far has reached $116.6 billion for more than 3.4 million borrowers, according to the Education Department.
The Supreme Court in June rejected Biden’s program for mass cancellation of student loan debt, and a majority of justices ruled that it had exceeded his authority.
That program, promised by the Biden campaign, would have canceled between $1,000 and $20,000 in federal loans for people with incomes below a certain income.
Since then, the White House has announced a new IDR plan that would lower monthly payments to 5% of a person’s discretionary income, down from 10%, and reduce the forgiveness schedule to 10 years of payments, from 20 or 25, if the initial loan is less than $12,000.
The Department of Education is also in the process of making rules to try again for debt relief through a different law, the Higher Education Act, though it is likely to face legal challenges as well.
