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Two conservative groups are not easing off their efforts to block student-loan forgiveness for thousands of borrowers.
On October 10, the New Civil Liberties Alliance, a nonprofit organization aimed at protecting constitutional freedoms, filed an appeal on behalf of the Cato Institute and the Mackinac Center for Public Policy to block 804,000 student-loan borrowers from receiving $39 billion in debt relief. The targeted relief was part of the first batch of President Joe Biden's one-time account adjustment for borrowers on income-driven repayment plans who made the required 20 or 25 years of qualifying payments. Those borrowers were notified of the relief in July, and began to have their discharges processed in August.
On August 4, the two conservative groups filed a lawsuit to block the relief, and just over a week later, a federal judge dismissed the case. But the groups are trying again, writing in their appeal that the judge's decision "constitutes reversible error."���They said that as nonprofits, the one-time account adjustments undermined their recruiting efforts for Public Service Loan Forgiveness, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.
"When an agency arbitrarily reduces the financial incentive for student-loan debtors to seek and remain in jobs with public service employers, at any given wage, the supply of workers willing to take and keep jobs with such employers inevitably falls," the appeal said. "That reduced supply of workers for public service jobs is a concrete economic injury."
On top of the $39 billion in relief for the over 800,000 borrowers announced in July, the Education Department also recently announced $9 billion in relief for an additional 125,000 borrowers — including 51,000 on income-driven repayment plans and 53,000 in public service loan forgiveness. It's unclear how those borrowers would be impacted by any legal decision, but the conservative groups are asking the Sixth Circuit Appeals Court to overturn the federal judge's decision to dismiss the case.
The Education Department previously said that the groups' 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, some borrowers have found themselves in repayment for far longer than anticipated due to paperwork errors, despite completing the required 20 or 25 years of required payments. The one-time account adjustments are intended to get those borrowers relief, and it's been significant for some of those borrowers. One borrower who was in repayment for three decades received notice his loans would be forgiven through the adjustment, and he told Insider "it just means this great load from the last 30 years of my life is off my shoulders."
"My wife and I are in a position where things are tight, and that forgiveness isn't going to change our lives," he said. "It's just going to take another number off the long list of numbers we're paying off, and I don't think that's an unusual situation for Americans right now."
