Student Loan Borrowers Promised Relief Forced to Pay

Nearly 60,000 student loan borrowers who were promised $6 billion in loan forgiveness are still in limbo after the Education Department promised their debts would be erased in January.

Altogether, around 200,000 borrowers were promised debt forgiveness in the Sweet v. Cardona lawsuit. The case, which found hundreds of thousands of borrowers had been misled into taking loans at for-profit schools with the promises of high-paying jobs, led to the federal government committing to canceling all plaintiffs' debt.

The borrowers were told all loan balances would be erased on January 28, in addition to having their credit scores restored and refunds issued. This applied to borrowers who attended one of the 150 listed for-profit schools, as well as a group of 64,000 who applied for borrower defense.

For many, the relief never came.

According to a Justice Department letter to the plaintiffs this month, at least one third of the borrowers are still waiting for the debt forgiveness.

The Education Department previously stated 95 percent of all borrowers eligible under the lawsuit had gotten their relief, but the Justice Department revealed the true number was only 69 percent.

"When people with student debt get relief, they buy homes, start businesses, and engage in the community in ways they weren't able to before, growing the economy," President Joe Biden recently wrote on X, formerly Twitter.

"That's why we're taking significant action to provide student debt relief to as many borrowers as quickly as possible."

As the Sweet v. Cardona borrowers wait, though, many are facing financial difficulties, struggling to afford basic necessities. Others have put off big purchases like homes as they wait with bated breath.

Biden has mentioned the $22.5 billion in student debt forgiveness countless times during his reelection campaign, but actually erasing the debt can become a more complicated process.

Some borrowers consolidated their loans into a massive payment, while others deal with multiple loan servicers.

But for those who are still waiting, it's been a long time coming. Biden initially approved the debt forgiveness in June 2022, but it took until November for a federal judge to approve the deal.

As to why the payments haven't arrived yet for so many, the federal government says student loan servicers have delayed the process. The Education Department announced that borrowers will have an updated timeline for relief by March 1.

Not everyone is in full support of the relief for borrowers, even for Sweet v. Cardona, in which institutions may have misguided borrowers about the return for their education.

"I feel this could be a Pandora's box for higher ed in the long run," Fred Amrein, CEO and co-founder of PayForED, told Newsweek. "There are definitely marketing promises that the education system takes advantage, but this is an education. The student needs to take some responsibility in their success."

The Biden administration is also in the process of attempting to approve more student debt forgiveness under a hardship clause, and millions of other borrowers continue the wait-and-see approach on their loan payments.

Biden recently announced 74,000 more borrowers will earn $5 billion in relief, including 44,000 public servants. The other tens of thousands of borrowers had made at least 20 years of payments on income-driven repayment plans.

Payments for student debt initially resumed in October, but many have struggled to keep up amid high inflation and economic uncertainty.

"The Biden Administration's decision to be proactive in its attempts to forgive student loans has had a ripple effect," Alex Beene, financial literacy instructor for the state of Tennessee, told Newsweek. "I think many former students are now in a state of waiting with the hope some form of forgiveness will eventually apply to them."

For those who don't have any foul-proof debt forgiveness promises on the horizon, though, paying off your debt each month will always be the recommended option.

"They need to be proactive, too," Beene said. "You have to be aggressive in attempting to pay down your student debt in the hope that regardless of potential forgiveness, it will be eliminated one way or another in time."