Over 12,000 Alabamians eligible for student debt relief, says U.S. Department of Education

Over 12,000 Alabamians have had their student loan debt forgiven, the U.S. Department of Education said last week. 

The borrowers had $550 million in debt relieved. 

Most of those savings come from fixes to the income-driven repayment plan. Many long-time borrowers who were eligible for forgiveness did not have their debt forgiven, including those who had made payments for over 20 years.

The Department began to notify the more than 800,000 eligible borrowers on July 14.

Chris Sanders, communications director Alabama Arise, said over email Monday that while it’s good the federal government are trying to ease debt burden for borrowers, Alabama and other states need to fund higher education.

Alabama’s average federal student loan debt is higher than the national average, according to the National Education Data Initiative. The average federal student loan debt in Alabama is $37,137. Just over half of borrowers are under 35.

Over 10% of Alabamians have federal student loan debt and over $23.5 billion in federal student loan debt comes from Alabama.

“By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans,” said U.S. Secretary of Education Miguel Cardona in a statement. “This Administration will not stop fighting to level the playing field in higher education.” 

According to the 2022 State Higher Education Finance Report, Alabama’s net tuition revenue per student was $14,642, more than twice the national average in fiscal year 2022. Net tuition revenue generally reflects the support received by institutions from students and families.

Loans will start discharging 30 days after borrowers have been notified by email. If someone does not want their loans forgiven, they are advised to contact their servicer during this period.

A 2022 NPR investigation found that of the 4.4 million borrowers who had been paying their loans for over 20 years on the income-driven repayment plan, only 32 had their debts forgiven. In 2022, the department said they would fix these “failures.”

The release said that the department will continue notifying borrowers when they reach the eligible forgiveness threshold every two months until next year when those still not eligible will have their payment counts updated.

This action is one of several that have come in the last few months after the Supreme Court struck down Joe Biden’s plan to forgive $10,000 in debt, up to $20,000, for those borrowers who met income requirements.

Biden’s administration has announced the SAVE plan, which would offer lower monthly payments to eligible borrowers.

A negotiated rulemaking committee has been formed for student loan forgiveness. In negotiated rulemaking, or “negreg” as it’s colloquially known, a group of around 30 with differing viewpoints will come to an agreement around a table, according to the Chronicle on Higher Education in 2017. The process takes around 18 months.