Couple with $250,000 in student debt is out of credit after three decades

President Joe Biden speaks with Secretary of Education Miguel Cardona on student debt August 24 in Washington, DC. Alex Wong/Getty Images

  • Ron and Marcia Rizzardi just paid off their $250,000 student debt.
  • This is due to the one-time account adjustment for borrowers on income-based repayment plans.
  • The Rizzardis made payments for nearly three decades, repaying more than they borrowed.

After nearly three decades of paying back, Ron and Marcia Rizzardi are finally done paying off their student loans.

When Insider first spoke to the Rizzardis in 2021, they had $130,000 in student debt to deal with — and that was after making payments worth $140,000 on an original balance of $54,000. That’s because of interest capitalization, a problem many borrowers are familiar with and where unpaid interest adds up to a borrower’s principal balance, making it difficult to keep track of the amount originally borrowed.

The couple married in 1992 and decided that consolidating their separate debt burdens would be their best financial option as it would allow them to pay off a single balance at one interest rate. However, once they began repaying, a series of layoffs and medical issues meant they had to defer their loans. This meant they made no monthly payments, but their debt continued to grow due to interest.

“I expect this debt will be with me to my grave,” Ron Rizzardi told Insider in 2021. “My only consolation is that when I die, they will go away.”

Ron and Marcia Rizzardi just got their student loan waived. Ron and Marcia Rizzardi

It looks like he’ll see the day his balance goes to zero. On August 15, the Rizzardis received a letter from their student loan company, Aidvantage, with the caption, “Congratulations! The Biden-Harris administration has fully waived your federal Aidvantage student loans listed below.” According to the letter, which Insider verified, the Rizzardis’ original consolidated balance of $256,711 — which is a parental loan for undergraduate or PLUS students included loans for her daughters – deleted.

“It’s a bit unbelievable — maybe surreal,” Ron Rizzardi told Insider after receiving the letter. “I no longer have to pay that amount. And as long as our income stays where it is, it’s going to be cumulative over the next year, two years, and we’re finally going to have more money deposited into our retirement accounts. The prospects of having money for retirement are probably better than they’ve been since I’ve collected my 401(k) for 30 years.”

This relief is due to President Joe Biden’s one-time account adjustment for borrowers on income-based repayment plans. This adjustment allows the Department of Education to assess which borrowers have met the required 20 or 25 years to receive loan forgiveness but have not yet received that relief due to administrative errors that are keeping those borrowers in repayment.

Most recently, the department announced that 804,000 borrowers had qualified for $39 billion of relief as a result of this adjustment — and that it would continue to audit borrowers’ accounts every two months to identify additional lots for forgiveness. Marcia Rizzardi said of the relief: “It’s life-changing for us.”

“I feel like finally someone has listened, that there’s really something wrong with the system,” she said. “We’ve made solid payments for 25 years, and this thing would only grow. It’s a broken system. We had already paid for it three times. It’s not like we’re trying to get out of debt, we owe.

“We feel like we paid for it and this government has basically supported ordinary people. He is merely correcting a system that was corrupt and broken and honoring people who did their best to make it happen and it would never end.”

“The uncertainty was very worrying”

There’s no doubt the Rizzardis are excited about the recent loan forgiveness, but getting to this point hasn’t been easy.

In the months leading up to that relief, Ron Rizzardi said he sought the advice of a bankruptcy attorney to explore alternative ways they could get rid of their debt without relying on federal efforts. Their confidence has dwindled due to constant legal challenges to Biden’s relief efforts — the Supreme Court rejected Biden’s plan for sweeping student loan forgiveness in late June, and conservative-backed groups filed a lawsuit to block account adjustment over income-related repayment plans.

Additionally, Ron Rizzardi said that a few weeks before the relief was announced, he called his student loan company for more information on the repayment. He said it felt like customer service reps were getting “real-time” updates on repayment changes.

“Brokers have struggled to keep up with advising borrowers about their options,” he said. “And we were in constant contact with an ombudsman at the Department of Education who was very helpful, but to a point they didn’t know anything else to tell us other than that there was a lawsuit and they’re still pushing forward.” The uncertainty was very unsettling.”

A federal court ultimately dismissed the lawsuit seeking to block the income-based repayment adjustment for lack of standing so that the administration could continue to service these loans.

However, as the student loan payment pause ends in September, borrowers continue to struggle with their balances. A spokesman for the Department of Education previously told Insiders the department is in frequent contact with service providers to ensure they are communicating effectively with borrowers about their repayment options.

For the Rizzardis, the chapter on repaying student loans is now closed.

“I had just gotten back from a meeting, sat down, and made a habit of checking my service rep’s account every day,” said Ron Rizzardi. “And I wasn’t expecting anything and I was a little nervous about some of the lawsuits that were out there. But then I looked at it and saw a change, a definite change. There was no payment and the balance.” was zero. And I thought: Wow, it finally happened.

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Robert Wilson

Business & economics analyst. Breaking down intricate financial trends for informed decision-making.

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