Home Minnesota Educator Supreme Court rules against loan forgiveness, payments resume in October

Supreme Court rules against loan forgiveness, payments resume in October

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Education Minnesota’s Degrees Not Debt program continues to support members navigating education debt and loans. Numerous updates have occurred in the last few months that affect borrowers – some good and some unfortunately not.

On June 30, the U.S. Supreme Court ruled against the Biden-Harris administration’s student loan forgiveness program.

Immediately after the decision was announced, the administration said they would be working to advocate for loan forgiveness in other ways. The Degrees Not Debt team will keep members up to date on any ways that these new relief programs could affect educators.

The U.S. Secretary of Education initiated a rulemaking process aimed at opening an alternative path to debt relief for as many working and middle-class borrowers as possible, using the Secretary’s authority under the Higher Education Act.

The U.S. Department of Education finalized the most affordable repayment plan ever created, ensuring that borrowers will be able to take advantage of this plan this summer—before loan payments are due. Many borrowers will not have to make monthly payments under this plan. Those that do will save more than $1,000 a year.

In addition, to protect the most vulnerable borrowers from the worst consequences of missed payments following the payment restart, the department is instituting a 12-month “on-ramp” to repayment, running from Oct. 1, 2023 to Sept. 30, 2024, so that financially vulnerable borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.

Student loan payments
to resume in October

This spring, Congress passed federal legislation that included an end to the pause on student loan payments and the resumption of interest accrual on loans. Loan servicers should begin to notify borrowers that payments will be required again after Oct. 1.

For members who are participating in Public Service Loan Forgiveness, the Degrees Not Debt team advises that you complete the enrollment in an income-driven plan in September of this year to be in the best position possible when payments resume.

Updates from Federal Student Aid

A number of new rules have also been proposed and will be in place this summer into next year. These updates to loan repayment rules are intended to make it easier for borrowers to qualify for loan forgiveness under the rules of income-driven repayment and Public Service Loan Forgiveness. For our members, these are the most important things to note:

In coming months, Federal Student Aid will change whether certain payments or months are credited toward your loan forgiveness in a one-time account adjustment. When this happens depends on a number of individual factors, but it should help address issues created by loan servicing companies and speed up the timeline for loan forgiveness.

Borrowers who would like to pursue Public Service Loan Forgiveness but still have ineligible loans have until the end of 2023 to consolidate. If you have FFEL loans, please email dnd@edmn.org to get more information.

The Department of Education intends to make more affordable income-driven plans available to borrowers in repayment. Tentative information suggests that these plans will be available when payments resume in October.

Minnesota Student Loan Advocate position a reality

For the last eight years, members of our union have been tirelessly lobbying for a Student Borrower Bill of Rights. After partial victory in 2021, the final provisions of this legislation become law on July 1 with the creation of a Student Loan Advocate in state government. The advocate will fill the critical role of protecting borrowers’ rights and enforcing rules that keep loan servicers accountable, including receiving borrower complaints.

The Degrees Not Debt team will share more information once the advocate is in place to help direct complaints to their office.

Training, support available

Education Minnesota continues to make our Degrees Not Debt training as accessible as possible. Our most recent webinar is online via our MEA Online platform. We’ve recently made updates to the system, so please note the directions included on the site if you have not used this platform before. Search the course catalog for Degrees Not Debt, looking for the most recent training.

As always, our Degrees Not Debt staff team is here to help, so please reach out to dnd@edmn.org with any questions.

A student debt relief story

Kat Jordahl, a teacher in St. Paul, was not very hopeful about loan forgiveness after hearing about the roadblocks others encountered, but she also knew that getting any kind of forgiveness would be life-changing for her, so she decided to try.

Jordahl had heard about Education Minnesota’s Degrees Not Debt program through friends and started emailing with program staff about her chances and began the process of having the team review her loan information.

“I was hesitant because it was some personal information and I am not proud of the total of my loans,” she said. “It was a lot and that felt shameful. But (the program staffer) was very friendly and we began the process. The process was actually fairly easy.”

Jordahl consolidated her loans, filled out the paperwork and spent a lot of time waiting.

“I knew there would be a lot of waiting involved,” Jordahl said. “Once my loans were consolidated I received a letter stating I had not made enough qualifying payments. (Degrees Not Debt staff) told me that this would happen, so I was not dismayed. Then I received a letter saying I had made enough qualifying payments.”

Finally, after six months of waiting, Jordahl received a letter saying her loans had been forgiven.

“I was shocked even though (staff) had said I had a really good chance,” said Jordahl. “I felt lighter, freer. It was like receiving your first paycheck, like I was being rewarded for 17 years of hard work in the classroom. It still feels unreal to me.”

Jordahl said anyone on the fence about attempting loan forgiveness should give it a try and to reach out to the Degrees Not Debt team.

“The support and guidance I received through Education Minnesota was key in understanding the process and being patient,” she said.

For more information on Degrees Not Debt, go to www.educationminnesota.org/advocacy/degrees-not-debt.

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