IDR Adjustment Law Suit Megathread

Edit: lawsuit dismissed! https://storage.courtlistener.com/recap/gov.uscourts.mied.371487/gov.uscourts.mied.371487.13.0.pdf

Edit: so it appears the forgiveness has started for those with the golden email. Note that it could take up to two weeks for the full files to be processed. Please try and refrain from calling your servicer as doing so won't make it happen any faster.

Edit: friends..this whole alphabetical order myth isn't a thing. Please stop posting the letters of your name unless we want to start a game of Scrabble in the thread.

To keep things organized we're going to keep all things about the lawsuit in this one thread.

I am NOT an attorney so I will not be answering legal questions about this suit.

You can read the suit here https://nclalegal.org/wp-content/uploads/2023/08/ECF-1_-Complaint.pdf

If you are unaware of what the one time adjustment is see here https://www.reddit.com/r/StudentLoans/comments/12s3bo0/idr_adjustment_faq_are_live/

A good article about the suit https://time.com/6302140/lawsuit-loan-forgiveness-income-driven-repayment/

An article containing the ED's response to the suit https://apnews.com/article/student-loans-cancellation-debt-forgiveness-73327bbcb47dba6aec0c686f44bc2ab4

What is the lawsuit about?

The suit is claiming that the one time account adjustment is unlawful in part because it did not go through the proper regulatory process, called negotiated rulemaking.

This suit is NOT about the new SAVE plan, that did go through that process. There are some elements of SAVE that are the same as the adjustment, such as allowing certain deferments to count towards the 20/25 years needed for IDR forgiveness. Those are also not at risk under this suit because they are future periods. The adjustment is broader than the SAVE plan and addresses past periods.

The suit also claims the adjustment is "arbitrary and capricious"

The case also claims that allowing the 36 months of forbearance under the waiver (they don't argue the covid period) to count is unlawful. I realize that some are reading this as the covid period, but I don't see it as that - the covid period has been longer than 36 months and they don't mention the cares act etc at all. They do talk about forbearance steering etc which is why i think the 36 months refers to that provision of the adjustment - not the cares act.

What harm are the plaintiff's claiming?

They claim that by allowing PSLF to be granted after less than 120 qualifying payments under the traditional rules the ED is increasing the recruitment costs for PSLF employers because those that get forgiveness sooner due to the account adjustment could leave their pslf eligible jobs.

What does this mean for those of us that received the "golden email?"

So far nothing. But today, August 7th, the plaintiff filed a temporary restraining order to prevent loan cancellation during the court proceedings. My understanding is that such orders, if granted, are usually granted quickly, so we should know this week how the judge is going to rule on that.

https://nclalegal.org/wp-content/uploads/2023/08/ECF-7_TRO-PI-Motion.pdf

What if I consolidated already - if this goes through will i be reset to zero?

I don't see a court ruling that way even if they rule in favor of the plaintiff due to the harm it would cause borrowers. But that's just my opinion. So if the case did go anywhere it would mean not getting credit for normally ineligible periods, not a reset to zero.

**I was about to consolidate to get the higher count - should i cancel it?"

Up to you. If you are concerned you do have under December 31st of this year to consolidate and get that higher count benefit so you could wait and see which way the wind might be blowing.

Remember that effective July 1, 2023 consolidation results in a weighted average of the underlying loan counts. So even if this waiver did get struck down, that benefit was done through negotiated rulemaking and is not under threat. So there truly is no more resetting to zero.

I'm so angry - what action can I take?

I don't blame you - you should be angry. This waiver has been public since April of 2022 and it feels particularly cruel for the plaintiffs to wait for so many borrowers to get that email announcing their forgiveness before filing suit. Unfortunately you can't sue someone for filing a mean lawsuit. I mean you can, but it would get thrown out. You could encourage Congress to approve the waiver under the law, but other than that, all we can do is watch and hope the courts see this as nonsense. For those wondering, the judge looking at this was appointed by George W Bush.