Approval letters for student loan forgiveness go out. Here’s what they mean.
About 16 million borrowers who applied for the Biden administration’s student loan forgiveness program received letters last weekend notifying them that they had been approved for debt relief.
However, the letter states that a series of legal proceedings “have currently blocked our ability to pay off your debt”. The approvals come after two courts blocked the plan and imposed legal obstacles on a federal program that promised to forgive up to $20,000 in student debt for about 40 million eligible Americans.
“Your application is complete and approved, and we will pay your approved debts if and when we prevail in court,” Education Minister Miguel Cardona said in the letter.
About 26 million people had applied for credit-easing efforts ahead of court rulings that effectively halted the Biden administration’s ability to accept new applications. The Biden administration is appealing these decisions, but it’s unclear if the cases will be decided.
On Tuesday, the Biden administration said it was extending the pause on student debt repayments. This freeze was due to expire on December 31, meaning borrowers would have started making repayments in January. With the recent extension, the break is now postponed until June 30, 2023 at the latest.
“I am confident that our student debt relief plan is legal. But he’s on hold because Republican officials want to block him,” President Biden wrote on Twitter. “That’s why [Education Secretary Miguel Cardona] extends the payment pause to no later than June 30, 2023 to give the Supreme Court time to hear the case during its current term.”
The letter from the Ministry of Education said it would keep applicants updated “if there are new developments”.
The letters “help people understand a little better why they haven’t had their debt forgiven yet,” noted Mike Pierce, executive director of the Student Borrower Protection Center advocacy group. “That doesn’t completely eliminate the very real economic anxiety that people on student loans are feeling right now.”
The irony of receiving loan forgiveness approval while being told that the plan may not go ahead due to legal challenges was not lost on recipients, who took to social media to comment on the mixed messages.
“Receiving the letter of approval for student loan forgiveness but saying we really can’t forgive your loans at this time is the highlight of 2022,” one person wrote on Twitter.
Receiving the approval letter for student loan forgiveness but saying we really can’t forgive your loans at this time is the high point of 2022 😏#Extend break #Clear student debt pic.twitter.com/yKdY4xORIn
— Skye Devonshire (@skyedevonshire) November 21, 2022
What is Allowed for Relief?
The Department of Education sent the letter to 16 million people who had applied for forgiveness of up to $20,000 in student debt, telling them they had the green light — at least from the Biden administration. However, the letters do not inform borrowers how much of their loans have been erased.
But because of court rulings, debt relief cannot move forward unless the Biden administration wins its legal challenges. The Department of Education “will process their appeal expeditiously once we prevail in court,” White House press secretary Karine Jean-Pierre said.
I asked for forgiveness but didn’t get a letter. Why?
The Biden administration had approved 16 million motions before the court rulings, and those people are now getting warnings about it. Some of these applicants may not have received the emails in the initial notification, but may soon receive a notification in their inbox, according to a Nov. 19 Cardona tweet.
“Starting today, applicants and others seeking relief from the Biden-Harris administration’s student debt relief plan will receive updates. If you don’t get an email today, don’t worry – there’s more to come,” Cardona said in a tweet.
But the other 10 million people who applied but weren’t approved before the court rulings may have to wait longer. “The Biden administration is in a difficult position right now — they can’t approve motions until there’s a change in the court,” Pierce noted.
And the roughly 14 million eligible borrowers who have yet to apply can no longer do so through the Department of Education’s online application, which was closed in response to the court rulings.
When could I see debt relief?
It’s unclear because that depends on the timing of the Biden administration’s appeals, Pierce noted.
Student debt relief advocacy groups on Tuesday hailed the White House’s decision to extend the moratorium until June 2023, which will give eligible borrowers financial leeway over the next few months as legal challenges advance.
“This extension means struggling borrowers can keep food on their tables throughout the holiday season — and months ahead — as the administration does everything in its power to deter the baseless and backward attacks on working families with student debt,” he said Pierce said in a statement Tuesday.