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Federal Student Aid reverses course on some relief approvals

By: Sequoia Carrillo | NPR
Posted on: Wednesday, December 14, 2022

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WASHINGTON, D.C. (NPR) — Many student loan borrowers were left confused Tuesday morning after receiving an email reversing course on their student debt relief applications.

The email, from Federal Student Aid, referred to the one-time relief plan that the Biden administration rolled out in August and – in recent months – put on hold following legal challenges.

Many borrowers had received an email in November saying that their application was approved to receive up to $20,000 in loan cancellation. That email, signed by Education Secretary Miguel Cardona, said that they would discharge borrowers’ approved debt “if and when we prevail in court.”

However, the latest emails say some approvals were sent in error. Now, those borrowers will have to wait until the program clears the courts in order to know how much, if any, of their debt will be wiped out.

The most recent estimate from the White House said some 16 million borrowers had been approved for the relief program. It’s not clear how many received Tuesday’s reversal email.

Persis Yu, deputy executive director and managing counsel for the Student Borrower Protection Center, says that this email puts many borrowers back “in limbo.”

“[Tuesday’s email] may not seem like a big deal, but borrowers are trying to figure out how to move on with their lives,” Yu says. “And so they’re hanging on these words and these words matter.”

Carolina Rodriguez says she’s hearing a similar sentiment when speaking to her clients at the Education Debt Consumer Assistance Program in New York. She says borrowers are confused and have reached out to confirm there isn’t anything they can do during this waiting period.

“The problem for us is that some clients have applied for other relief measures, like [public service loan forgiveness] and think the email they got is related to that versus the Biden-Harris cancellation,” she says.

“Communicating clearly and accurately with borrowers is a top priority,” a spokesperson for the Department of Education says. “We are in close touch with Accenture Federal Services as they take corrective action to ensure all borrowers and those affected have accurate information about debt relief.”

With the Supreme Court set to hear the case as early as February and come to a decision sometime this spring, it appears that borrowers will be stuck in limbo for at least a few more months.