Biden administration informs borrowers they have been approved for student loan forgiveness

Borrowers will be notified of their eligibility for student loan forgiveness. (iStock)

The Biden administration has begun sending emails to federal student loan borrowers who have been approved for student loan forgiveness, even as the program faces legal challenges.

“We have reviewed your application and determined that you are eligible for loan forgiveness under the plan,” Secretary of Education Miguel Cardona wrote in an email. “We’ve sent this approval to your loan manager. You don’t need to take any further action.”

“Unfortunately, a number of lawsuits have been filed challenging the program, which means we are currently unable to service your debt,” Cardona continued. “We are convinced that the lawsuits are worthless and the Justice Department has filed an appeal on our behalf.”

Cardona said the Department of Education would continue to update borrowers on new developments, saying their debt would be forgiven if and when the department wins in court.

“The Biden-Harris administration is committed to helping borrowers recover from the pandemic,” he wrote. “Education is a great equalizer and we will never stop fighting for you!”

The student debt relief plan would forgive up to $10,000 in eligible student loans from the Department of Education or $20,000 for borrowers who received Pell Grants. Eligible borrowers cannot earn more than $125,000 per year if they are single or $250,000 for married couples.

However, the Department of Education is no longer accepting applications for student loans at this time.

“Courts have issued orders blocking our student debt relief program,” reads a post on the Federal Student Aid website. “As a result, we are not accepting applications at this time. We are seeking to reverse those orders.”

If you have private student loans, they are not eligible for federal student loan forgiveness. But you could consider refinancing to a lower interest rate. Visit Credible to compare different student loan lenders, without impacting your credit score.

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Legal battle for student loan forgiveness

The Biden administration’s student loan forgiveness plan has spawned several lawsuits in recent months.

Most recently, in November, the St. Louis-based 8th US Circuit Court of Appeals issued a court order extending a hold on the debt relief plan.

That block was part of a lawsuit brought against the Department of Education by the states of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. These states argue that the plan threatens their future tax revenues. A federal judge had rejected that argument, but the states appealed the ruling.

Meanwhile, in a separate lawsuit, a judge in Texas deemed the program “illegitimate” and also blocked the pardon plan. That lawsuit was brought by two borrowers who were wholly or partially ineligible for debt forgiveness.

If you have private student loans and want to lower your monthly payment, consider refinancing at a lower interest rate. Visit Credible to compare different student loan lenders without impacting your credit score.

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The payment pause for student loans can be extended

Following court rulings against the Department of Education, many activists have begun calling on the government to extend the freeze on federal loan payments.

As part of the CARES Act introduced at the outbreak of the COVID-19 pandemic in 2020, payments on certain federal student loans were suspended and interest rates fell to zero. Currently, the freeze expires on December 31. This means borrowers would resume payments in January.

“We call on President Biden to protect borrowers during this uncertain time by extending the student loan payment pause until all legal hurdles are cleared and debt is forgiven,” the Student Debt Crisis Center (SDCC) said in a statement.

Private student loan borrowers are not eligible for federal debt relief. But you can consider refinancing your private student loans at a lower interest rate. Visit Credible and speak to a student loan expert to see if this option is right for you.

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