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Roughly 360,000 student loan borrowers have had their applications for Public Service Loan Forgiveness approved under a temporary waiver aimed at making the program easier to access, resulting in more than $24 billion in relief, according to data published by the Department of Education Friday, MarketWatch.com reported. The debt cancellation comes as the White House’s broad-based debt relief program is mired in litigation. The waiver program is part of a suite of initiatives from the Biden administration aimed at making it easier for borrowers to take advantage of debt relief programs already available to borrowers under the law, including those attempting to make borrowers whole when they’ve been scammed by their schools. For years, borrowers and advocates complained that the promise of loan forgiveness to public servants, which was signed into law in 2007, has been too difficult to access. Under the Public Service Loan Forgiveness program, borrowers who work for the government and certain nonprofits are eligible to have their federal student debt canceled after 10 years of payments, but actually getting the debt discharged wasn’t straightforward. In the first years borrowers were eligible to have their debt canceled, the government rejected 99% of applications from borrowers. Though borrowers had worked in public service for at least 10 years and were making loan payments during that time, in some cases their federal loan wasn’t eligible for forgiveness, in others, they were using the wrong repayment plan and still, in other cases, they were making payments at the wrong time. Last year, the Biden administration announced that borrowers could apply to have some of these payments counted toward the 120 needed for relief under PSLF through the temporary waiver program.

Americans' ability to meet a large unexpected expense was little changed in the New York Federal Reserve's latest survey on credit issues, even as respondents to the poll said they might need to take on more credit in the coming months, Reuters reported. The regional Fed bank said in its latest Credit Access Survey, which was released on Monday and details developments for this year, that respondents reported "a slight increase in the subjective financial fragility of U.S. households." Those who said they could come up with $2,000 to meet an unexpected expense ebbed slightly to 67.5% for the year, versus 68.2% who said they could do so in 2021. There was also little change among those who said they might need $2,000 unexpectedly, according to the New York Fed report, which concluded that both measures have been little changed since 2015, even as the coronavirus pandemic roiled the economy. The New York Fed report also found that overall there has been "a decline in consumer credit demand in 2022, with most credit application rates stable or weakening, except for a rise in credit card applications." But it added that households expect next year to see reduced demand for housing and auto loans, even as they foresee an uptick in applying for credit cards or seeking higher credit limits on existing cards.

The Biden administration on Thursday released new guidelines that will make it easier for economically distressed student loan borrowers to discharge their student debt in bankruptcy proceedings, the Wall Street Journal reported. The long-awaited guidelines from the Justice Department and Education Department set specific requirements for borrowers to prove that they are experiencing economic distress. The government will calculate whether a debtor’s expenses equal or exceed a debtor’s income, and if they do, the Justice Department will declare that the borrower is unable to pay their debts. The Justice Department will also assess whether a borrower’s present inability to pay will likely persist in the future, taking into account factors like retirement age, disability, long-term unemployment or if the borrower didn’t finish their degree. Under the current system, which the administration described as unnecessarily burdensome, the federal government often delves into borrowers’ financial history to show they haven’t demonstrated their economic hardship. “Today’s guidance outlines a better, fairer, more transparent process for student loan borrowers in bankruptcy,” said Associate Attorney General Vanita Gupta. The changes come as the Biden administration’s mass student debt cancellation plan has been blocked by two federal courts. That program, which would cancel up to $20,000 for borrowers who make under $125,000 or $250,000 for a married couple, relies on a different definition of economic hardship — namely, that the negative economic effects of the pandemic allow the administration to forgive debt on a broad scale. A federal judge in Texas has rejected that authority, and the Justice Department has appealed the ruling. Read more.(Subscription required.)

For more information, click here to read DOJ's press release.

The legal battle over President Joe Biden’s plan for student debt relief could be headed to the U.S. Supreme Court as the government seeks to lift a lower court order that blocked the program indefinitely, Bloomberg News reported. The Biden administration, which has been fighting multiple challenges to the program, said Thursday in a Texas court filing that it planned to ask the high court to reverse a Monday order in a separate case from a federal appeals court in St. Louis involving a lawsuit brought by six Republican-led states. Implementation of the plan, which would distribute as much as $20,000 to qualified borrowers, has been on hold since Oct. 21, when the Eighth Circuit Court of Appeals issued an emergency stay. Last week, in a separate case brought by two borrowers, a federal judge in Texas struck down the plan as unlawful. About 26 million people had requested student-debt forgiveness before the U.S. Department of Education stopped accepting applications. Only borrowers making less than $125,000 a year, or $250,000 for households, can qualify. In the Texas case, the U.S. government already has asked the Fifth Circuit Court of Appeals to overturn the decision by the lower court judge who ruled in favor of Job Creators Network Foundation, a conservative advocacy group that sued on behalf of two Texans who claim that their education debt was unfairly excluded from the program.

A federal judge struck down President Biden’s student loan forgiveness plan on Nov. 10. The ruling is being challenged, but that hasn’t stopped scammers eager to capitalize on borrowers’ confusion and frustration, the Wall Street Journal reported. Scams targeting Americans impatient for debt forgiveness surged in the first 10 months of 2022, according to the Federal Trade Commission. The agency received 76,000 complaints of scams related to student loans through the end of October, compared with 46,243 for all of 2021. Scammers sprinkle details from the latest headlines to add urgency and authenticity, with some claiming they can fast-track applications and payments, federal officials said. “Scammers follow the news. So a seasoned scammer will weave in language from actual loan benefits and loan programs along with things that are purely fraudulent,” said Michelle Grajales, a staff lawyer for the Federal Trade Commission. “They might promise to get you $60,000 of loan forgiveness next month.”

A federal court approved a settlement between the Department of Education and around 200,000 student loan borrowers on Wednesday for $6 billion in loan relief, as the borrowers argued the department was taking too long to process applications claiming the borrowers were defrauded by their colleges, The Hill reported. Federal Judge William Alsup gave a final ruling in the Sweet v. Cardona case, formerly called the Sweet v. DeVos case because the lawsuit was brought during the Trump administration. The borrowers, represented by the Project on Predatory Student Lending (PPSL) and Housing and Economic Rights Advocates, filed the lawsuit back in 2019 in the U.S. District Court for the Northern District of California. The lawsuit was filed as the borrowers argued that their applications for the borrower defense program were not getting addressed by the Department of Education. Borrower defense applications are intended for borrowers who believe they have been defrauded by their schools and are looking for a partial or full discharge of the federal student loan debt they have. Judge Alsup said in his decision that the “program set up by Congress has devolved into an impossible quagmire,” pointing out that it would take the Education Department more than 25 years to get through backlogged applications if they had all their borrower defense employees working a full work week with no holidays all year long. The settlement on Wednesday includes a full discharge of loans, refunds and credit repairs for around 200,000 borrowers with borrower defense applications who went to certain schools. Around 64,000 borrowers who did not attend the agreed-upon schools have to have their applications processed within a certain time frame, or they will get automatic relief as well.

A U.S. appeals court has extended a block on President Joe Biden's administration from fulfilling his plan to cancel hundreds of billions of dollars in student loan debt at the urging of six Republican-led states, a court filing on Monday showed, Reuters reported. The St. Louis-based 8th U.S. Circuit Court of Appeals issued an injunction barring the U.S. Department of Education from erasing student loan debt as part of Biden's plan to deliver "life-changing relief" to tens of millions of borrowers. The court on Oct. 21 temporarily barred Biden's administration from discharging student loans while it considered an emergency request by the six states for an injunction. The states' case was dismissed, though they are appealing that decision. Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina claim Biden's plan skirted congressional authority and threatens the states' future tax revenues and money earned by state entities that invest in or service student loans. But U.S. District Judge Henry Autrey in St. Louis on Oct. 20 dismissed the states' case, saying that while that raised important challenges they lacked legal standing. Debt forgiveness would eliminate about $430 billion of the $1.6 trillion in outstanding student debt and that over 40 million people were eligible to benefit, according to the nonpartisan Congressional Budget Office.Read more.

In related news, White House officials are weighing extending a pause on student debt payments after a federal appeals court blocked President Biden’s plan to cancel up to $20,000 in debt per borrower, the Washington Post reported. In August, Biden announced that the administration would implement student debt forgiveness while simultaneously ending a moratorium on student debt payments that started during the pandemic. But Biden’s plan has so far been thwarted in the courts. The U.S. Court of Appeals for the 8th Circuit, by a 3-0 vote on Monday, issued an injunction preventing the administration from going forward with discharging debt, and a Texas judge last week declared the program unlawful in a separate ruling. Although the Biden administration has vowed to defend the program in court, White House officials have in recent days discussed the possibility of extending the debt freeze again if they are unable to move forward with the president’s initial program. Payments had been scheduled to resume on Jan. 1 in conjunction with the loan forgiveness. Read more.