More Student Loan Borrowers Are Getting Rid of Debt Through Bankruptcy
United States North America Higher Education News Statistics by Erudera News Jul 25, 2024

More student loan borrowers in the United States who filed for bankruptcy are seeing their debt forgiven, the Department of Education has said. Successful debt forgiveness cases follow a change in policy by US President Joe Biden.
Data released by the department reveal that 588 people filed cases for student debt relief between October 2023 and March 2024. This is a 36 percent increase from the previous six-month period, Erudera.com reports.
Additionally, data show the number of cases filed from November 2022 to March has increased compared to previous years. A total of 1,220 cases were filed during this period and the department expects this trend to continue.
98 percent of borrowers who filed cases from November 2022 to March have received debt relief, either full or partial. The number of court rulings to provide full or partial relief to student loan borrowers over the past six months surpassed the number of such decisions made in the previous 12 months.
“Our clear, fair, and practical standards are helping struggling borrowers find relief that was previously out of reach. This data should puncture the myth that struggling borrowers cannot discharge their student loan debt through bankruptcy.
We will continue to work with our partners at the Department of Justice to make it simpler and easier for borrowers to get much-needed relief in the way it was intended,” the US Under Secretary of Education James Kvaal said in a statement on July 17, 2024.
Last year, the Biden administration introduced another plan called SAVE, the Saving on a Valuable Education; however, the federal appeals court temporarily blocked the plan from proceeding further, leaving millions of borrowers uncertain about their debt.
The 8th Circuit Court of Appeals in St. Louis issued an order Thursday blocking the implementation of the SAVE plan until the court decides on a request from seven Republican states.
“Today’s ruling from the 8th Circuit blocking President Biden’s SAVE plan could have devastating consequences for millions of student loan borrowers crushed by unaffordable monthly payments if it remains in effect,” Education Secretary Miguel Cardona said after the ruling, calling it “shameful.”
The Republican-led states that filed a lawsuit are Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma.
SAVE was launched after the Supreme Court struck down Biden’s student loan forgiveness plan last July. Under this plan, $400 billion in debt was planned to be forgiven. Currently, of the more than eight million people who are enrolled in this plan,4.6 million have $0 monthly payments.
Following the court’s order, the Department of Education said it would pause student loan payments for these 8 million borrowers enrolled in the plan.
Read Also:
>> Over 19 Million US Student Loan Borrowers Aren’t Paying Their Debt
>> Many Americans Say College Degrees Are Worth the Money But Only Without Loans
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