Many people rejoiced when the Biden Administration offered even a little bit of student loan relief, promising to forgive up to $20,000 for public borrowers. Unfortunately the program has run into problem after problem, and has hit yet another road block.
Student loan forgiveness approval letters are going out, but that doesn’t mean the loans have actually been forgiven yet.
If you get one, it will tell you that your application has been approved and you don’t need to take any further action, but the loans have not been discharged yet. The letters also offer reassurance that the Biden administration believes the lawsuits are “meritless” and that the Department of Justice has appealed.
None of the letters even say how much money borrowers are eligible to have forgiven.
Currently student loan relief is being blocked by an injunction issued by the Eighth Circuit Court of Appeals.
Those who received Covid-19 student debt relief expect their payments to resume in January. Unfortunately, you should continue to make payments even if you are eligible for debt relief. You can expect student debt relief to be delayed for months, and there’s always a chance that the Biden administration will lose in court. The Biden administration is apparently considering another extension, but hasn’t made any official announcements yet.
They have mentioned they might want to postpone payments just because the confusion over student loan forgiveness could make repayment extremely chaotic and lead to many defaults.
There is a silver lining: a new repayment plan for some struggling borrowers should start in July, capping payments at just 5% of discretionary income.
If you’re having trouble repaying your student loans you do have options. It is possible to discharge some student loans through bankruptcy, though you must meet certain stringent conditions. Even if you can’t meet those conditions, seeking bankruptcy relief might put enough breathing room in your finances to grant you the power to meet the payments as required.
Schedule a free case review to go over your options. Labayen Law has helped thousands of Newark, NJ residents manage the financial issues brought on by high student debt payments.
We will continue to watch developments in the student loan space, and report them here.
See also:
FFEL Borrowers Left Behind in Quiet Change to Student Loan Relief Plan
Student Loan Debt Cancellation for Newark, NJ Residents
7 Signs It’s Time for Newark, NJ Residents to Consider Bankruptcy