IMPORTANT PROGRESS FOR STUDENT LOAN BORROWERS WHO HAVE BEEN IN REPAYMENT TWO DECADES OR MORE

Posting from the National Consumer Law Center

Reposting from NCLC, July 18, 2023: The Department of Education has begun the process of automatically discharging $39 billion in federal student loans for more than 800,000 borrowers who have been in repayment for over two decades and are eligible for discharge of their remaining balance under the income-driven repayment program, but hadn’t yet received relief due to servicing and other system failures.

Borrowers will be eligible for this relief if they have accumulated the equivalent of 20 or 25 years (depending on their loan type) of qualifying months of student loan payments under IDR plans. The Department began notifying eligible borrowers at the end of last week that their outstanding student loan balances would be canceled and discharges are set to begin 30 days after notification.

NCLC and our allies have, for years, been calling attention to the decades-old problems with the Department’s IDR program that have failed to credit borrowers’ time in repayment and created often insurmountable hurdles for those with the oldest debts to secure loan forgiveness and a pathway to a debt-free future. We applaud the Department for adopting these long-overdue fixes – ones that NCLC and our allies have been fighting for.

Now, the work must continue. Roughly 3 million more borrowers – who have been in debt for the same amount of time as those who received relief and may have fallen into default – have encountered many of the same problems and are still waiting for their promised relief. We will continue to work with the Administration to ensure these borrowers are not left behind.

Visit NCLC’s new Student Loan Borrower Assistance project website to learn even more about the fixes to the IDR program.
Thank you for standing with us in this critical work.

Abby Shafroth
Co-Director of Advocacy
Director, NCLC Student Loan Borrower Assistance Project.

Diane’s Musings

sad senior woman counting coins
– Diane L. Drain

Student loan debt affects everyone, no matter their age.  Ninety percent of student loans are federal monies, which taxpayers money.  Student loans have been abused and misused by almost everyone involved.  Not just the borrowers, but also the colleges and government assistance programs.  The colleges see student loans as a huge money maker.  Many colleges forget their obligation to provide a quality education for the money they are paid.  Some borrowers see the money as “free” becuase it is so easy to obtain.  They don’t realize it is a contract with the lender (funded by you and me, the taxpayer) that must be repaid.   

I agree that everyone should have a right to better their lives through education.  Whether that education is free (as in some countries), or paid by the student is dictated by the policy of that country.  Student loans are be not bad as such, but there must be tighter rules on the lending practices.  The other side of that coin, the borrowers must be commited to repaying the taxpayers who loaned the funds.

I am not against forgiving loans that have been paid on for decades (this current policy is 20-25 years).  That is enough time for the borrowers to suffer.  But this policy ignors the other player – that is the college that lent the taxpayer funds.  What is being done to require the colleges qualify the borrowers before giving them taxpayer money?  If that is not addressed, then this insanity will continue.

The bottom line – everyone involved in the student loan business (borrowers and lenders) must recognize their obligation to the taxpayers.  If the loans are forgiven, then the taxpayers lose.  If the colleges continue to be rewarded with high profits and no accountability, the taxpayers lose.  If the borrowers continue to be rewarded with the confirmation that it was “free” money, the taxpayers lose.  This cycle cannot continue.

682 words|3.6 min read|Categories: Bankruptcy Articles & Resources, Consumer Issues, Student Loans|By |Published On: July 19th, 2023|Last Updated: September 4th, 2023|

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Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

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