- Over 800,000 student-loan borrowers are set to start seeing their debt wiped out.
- It's part of a one-time account adjustment for borrowers on income-driven repayment plans.
Student-loan forgiveness is set to begin for thousands of borrowers.
On Monday, student-loan companies are set to begin discharging the debt of 804,000 borrowers who have qualified for $39 billion in debt relief — part of the first batch of borrowers affected by the Education Department's one-time account adjustment for income-driven repayment plans.
The department announced on July 14 that borrowers who had made the required 20 or 25 years of qualifying payments on income-driven repayment plans would be notified of their debt cancellation and that 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 of Education 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 whether they qualified for relief, the future of those discharges is uncertain. Last week, the New Civil Liberties Alliance, a nonprofit 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 President Joe Biden's plans to get relief to borrowers who made necessary payments on income-driven repayment plans.
The groups argued that because they're 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 10 years of qualifying payments.
While the groups requested the court halt the relief before Monday, when the discharges were set to begin, the judge has yet to issue a decision. However, if the court pauses the relief, it's unclear how it would affect the 804,000 borrowers who started to receive discharges.
An Education Department spokesperson said at the time the lawsuit was filed that it was "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."
The statement added: "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 legal battles — keeps 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 saying his loans qualified for relief because of the account adjustment told Insider that after the recent lawsuit was filed, he was "very, very bummed this time because a tiny, small, sad part of me held out hope that the loan will finally be forgiven."
Have you received student-debt relief? Do you have a story to share about student debt? Email this reporter at asheffey@insider.com.