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New Year, Same Old System? – 2024 Forgiveness and the End of the Three-Year Federal Student Loan Hiatus

Posted by J. Edward Richards | Apr 17, 2024 | 0 Comments

As the old saying goes there are few things in life as certain as death and taxes. The modern spin on that phrase should include federal student loan repayment. For three years, federal student loan borrowers have enjoyed the freeze on interest and payments on their loans. However, it was inevitable that this reprieve would end. Interest began accruing on federal loans again on September 1, 2023, and the first repayment since 2020 came due that October. The repayment restart has not been without errors and failures that point to the continued need for systemic reform of the federal student loan system.  

More than 800,000 borrowers were delinquent on their first payment when servicer MOHELA failed to send timely billing statements to 2.5 million borrowers. The Department of Education has a withheld $7.2 million payment to MOHELA as a result. This past week, three other servicers were added to the list along with MOHELA: Aidvantage, EdFinancial, and Nelnet. Those three servicers will be docked approximately $2 million for their untimely billing to 758,000 borrowersOn top of delayed billing statements, the Consumer Financial Protection Bureau indicated that borrowers have encountered inaccurate bills, long hold times to reach a representative, and even delay in enrolling in President Biden's new SAVE repayment plan.  

While the Department of Education's pledge to “continue[ efforts to strengthen protections for student loan borrowers and hold servicers accountable,” the borrowers must navigate an economy with reduced buying power due to record high interest rates and continued inflation. In fact, the Department reported that 40% of the 22 million borrowers whose bill came due had failed to make their first payment as of mid-November 2023.  

Despite the same old system insofar as servicer flaws are concerned, 2024 holds a number of opportunities for borrowers to seize if they find themselves struggling to stay afloat. Two of these opportunities are discussed below: 

  1. SAVE Plan Payments Cut in Half The Saving for a Valuable Education (SAVE) plan already reduced payments for thousands of borrowers, and in July 2024 we can expect that payment for undergraduate loans to cut in half.  


  1. Reprieve Through Bankruptcy – For years, discharging a federal student loan in bankruptcy was nearly a myth. Because it was next to impossible to receive in practice absent a terminal illness, many borrowers simply gave up hope of ever unloading their student loans. Now, borrowers must prove they meet three criteria to have their federal loans discharged in bankruptcy: 

  1. Lack the ability to currently repay the loan, 

  1. Unable to repay the loan in the future, and  

  1. Good-faith effort was made to repay the loan. 

After one year, data indicates that more borrowers have been successful via bankruptcy.  


Holland Law Group recognizes that student loans may not be the only debt you bring with you into the new year. In 2024, don't let those old credit accounts, payday loans, medical bills, and underwater car payments drag you down. Reach out to the experienced attorneys at Holland Law Group for a free consultation to see whether a bankruptcy filing is right for you, with office across the state we help Floridians from the panhandle to Miami and all points in between.  

About the Author

J. Edward Richards

Edward Richards is from Pensacola, FL. He received his J.D. from Mercer University, as well as a certificate fromthe school's prestigious Advanced Legal Writing Program. He returned to Florida as a prosecutor in Bradenton beforemoving to auto insurance litigation. Edward's focus in the high-volum...


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