- Over 800,000 student-loan borrowers will now start seeing their debt wiped out.
- It's part of a one-time account adjustment for borrowers on income-driven repayment plans.
- The future of the relief is uncertain after conservative groups filed a lawsuit to block it.
Student-loan forgiveness is now beginning for thousands of borrowers.
On Monday, student-loan companies will begin discharging the debt of 804,000 borrowers who qualified for $39 billion in debt relief — part of the first batch of borrowers impacted by the Education Department's one-time account adjustment for income-driven repayment plans.
The department announced on July 14 that borrowers who have made the required 20 or 25 years of qualifying payments on income-driven repayment plans will be notified of their debt cancellation, and 30 days later, their servicers would begin discharging their loans.
"At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That's unacceptable," Under Secretary James Kvaal said in a statement at the time. "Today we are holding up the bargain we offered borrowers who have completed decades of repayment."
While the department said it would review borrowers' accounts every two months to determine if they qualify for relief, the future of those discharges are uncertain. Last week, the New Civil Liberties Alliance, a nonprofit organization aimed at protecting constitutional freedoms, filed a lawsuit on behalf of two conservative groups — the Cato Institute and the Mackinac Center for Public Policy — to block Biden's plans to get relief to borrowers who have made necessary payments on income-driven repayment plans.
The groups argued that as nonprofits, the relief would undermine their recruiting efforts through the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after ten years of qualifying payments.
While the groups requested the court halt the relief before Monday, when the discharges are set to begin, the judge has yet to issue a decision. However, should the court pause the relief, it's unclear how it will impact the 804,000 borrowers who have started to receive discharges. An Education Department spokesperson said at the time the lawsuit was filed that the lawsuit is "nothing but a desperate attempt from right wing special interests to keep hundreds of thousands of borrowers in debt, even though these borrowers have earned the forgiveness that is promised through income-driven repayment plans. We are not going to back down or give an inch when it comes to defending working families."
As Insider previously reported, the uncertainty with the relief – and the ongoing legal battles — and keeping borrowers in limbo, especially with federal student-loan payments set to resume in October after an over three-year pause. One borrower who received an email that his loans qualify for relief due to the account adjustment told Insiderthat following the recent lawsuit, he's "very, very bummed this time because a tiny, small, sad part of me held out hope that the loan will finally be forgiven."