The new action was announced as a “one-time adjustment” that would count certain periods of past nonpayment as if borrowers had been making payments during that time. It moved 804,000 borrowers across the 20- or 25-year mark needed for cancellation, and it moved millions of others closer to that threshold.
Under the one-time fix, past periods in forbearance were also counted as progress toward Public Service Loan Forgiveness, a program that offers cancellation after 10 years of payments while working in a government or nonprofit job. “No authority allows the Department to count non-payments as payments,” the lawsuit says. It adds that the action came in “a press release that neither identified the policy’s legal authority nor considered its exorbitant price tag.”
The conservative groups say Biden’s plan undercuts Public Service Loan Forgiveness. The Mackinac Center and Cato Institute say they employ borrowers who are working toward student loan cancellation through the program. They say Biden’s action illegally accelerates progress toward relief, diminishing the benefit for nonprofit employers.
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