Couple With $250K in Student Debt Gets Loans Wiped Out After 3 Decades

• Ron and Marcia Rizzardi have just written off $250,000 in student loan balances.
• This is because a one-time account adjustment will be made for borrowers who have a repayment plan based on their income.
• For nearly 30 years, the Rizzardi family has paid off and paid back more than they borrowed.

After nearly 30 years of paying off, Ron and Marcia Rizzardy finally paid off their student loans.

When an insider first spoke with the Rizardis in 2021, they had $130,000 in student loans. That was after making a payment worth $140,000 against the original balance of $54,000. The reason is the interest capitalization problem that many borrowers are familiar with, where unpaid interest accumulates on the borrower’s principal balance, making it difficult to maintain the original amount borrowed.

The couple married in 1992 and decided that consolidating their separate debts so that they could pay off one balance at a single interest rate was their best financial option. But once he started paying it off, a spate of layoffs and medical issues forced him to defer his loan repayments. In other words, I haven’t been able to make my monthly payments, but my debt has continued to grow because of the interest.

“I fully expect this debt to last to the grave,” Ron Rizzardi told an insider in 2021. “My only consolation is that I will be debt free when I die.”

It looks like he can survive until the day his balance hits zero. On August 15, the Rizardis received a letter from the student loan company AidVantage with the headline: “Congratulations! The Biden-Harris Administration has fully forgiven the following federal student loans from AidVantage.” The Rizzardi’s original consolidated balance of $256,711, which includes an undergraduate parental loan (PLUS) loan to their daughter, will be extinguished, according to a letter seen by an insider.

“It’s kind of unbelievable, maybe surreal,” Ron Rizzardi told an insider after receiving the letter. “That amount is no longer something I have to pay. “I have it in my retirement account. became.”

The relief is believed to be due to temporary account adjustments for borrowers with income-based repayment plans by President Joe Biden. With this adjustment, the Department of Education will allow borrowers who continue to repay due to clerical errors even though he has completed the 20- or 25-year term under the plan required to receive loan forgiveness. borrowers who have not yet received relief.

Just recently, the department announced that 804,000 borrowers would be eligible for $39 billion in relief under this adjustment, and will continue to review borrower accounts every two months, adding more borrowers eligible for loan forgiveness. announced to identify Marcia Rizardi said of the relief, “This is life-changing for us.”

“I feel like someone finally heard that something was really wrong with the system,” she said. “We have been paying well for 25 years and this problem only got worse. This is a broken system. I’m not trying to get out.” We owe it.

“We feel we have paid the price, and this administration has basically helped the average people. It was just a tribute to those who served and it never ended.”

“Uncertainty was very disconcerting”

Lizzardi is undoubtedly excited about his recent loan forgiveness, but getting there hasn’t been easy.

In the months leading up to the bailout, Ron Rizzardi said he sought the advice of bankruptcy lawyers to consider alternative routes to forgive the debt without resorting to federal efforts. Their credibility has eroded because of constant legal challenges to Mr. Biden’s bailout. In late June, the Supreme Court overruled Mr. Biden’s broad student-loan forgiveness plan and a conservative-backed group filed a lawsuit to block income-based account reconciliation. repayment plan.

In addition, Ron Rizzardi said he called the student loan company to get more information about repayments weeks before he was notified of the relief. He said he felt like customer service representatives were learning “in real time” about repayment changes.

“Agencies were having trouble keeping up with people with loans about what their options were,” he said. “And we have been in constant contact with the Ministry of Education’s ombudsman, who has been very kind, but they have no idea what we can say other than that they have a lawsuit and are still making demands. We weren’t there. The uncertainty was very disconcerting.”

A federal court ultimately dismissed a lawsuit seeking an injunction to stop income-based repayment adjustments on the grounds of lack of status, allowing the administration to continue paying off those loans.

Still, borrowers continue to face balance problems as the moratorium on student loans ends in September. A spokeswoman for the Department of Education previously told an insider that the department is in frequent contact with debt collectors to ensure they are effectively communicating repayment options to borrowers.

For the Rizzardi family, the chapter on student loan repayment is over.

“I just got home from a meeting and got into the habit of sitting down and looking at my servicer accounts every day,” Ron Rizzardi said. “And I wasn’t expecting anything and I was a little nervous that there were some lawsuits going on. was seen, there was no payment and there was no balance” was zero. And I was like, wow, it finally happened. ”