Student Loan Forgiveness: 855,000 Borrowers to Get Debt Discharged

Student Loan Forgiveness: 855,000 Borrowers to Get Debt Discharged

The Biden administration has given the green light to student loan forgiveness for a fresh group of borrowers as part of a temporary initiative aimed at addressing past issues with income-driven repayment plans. Recent data from the Education Department reveals that hundreds of thousands of borrowers have already benefited or are set to receive relief through this program. Furthermore, there are indications that more loan forgiveness initiatives are in the pipeline.

U.S. Secretary of Education Miguel Cardona expressed, “For years, millions of eligible borrowers were unable to access the student debt relief they qualified for, but that’s all changed thanks to President Biden and this Administration’s relentless efforts to fix the broken student loan system.” He highlighted that this announcement builds upon the administration’s ongoing efforts to make higher education more affordable and protect students from unaffordable debt.

Here’s what borrowers need to know about the Student Loan Forgiveness Through IDR Adjustment Initiative:

  1. IDR Account Adjustment: This is the latest round of student loan forgiveness approvals, initiated by the Biden administration last year. It’s designed to rectify long-standing problems associated with Income-Driven Repayment (IDR) plans. These plans link monthly payments to a borrower’s income and family size and can lead to loan forgiveness after 20 or 25 years, or even as soon as 10 years for those pursuing Public Service Loan Forgiveness (PSLF).
  2. Historical Problems: Both PSLF and IDR have been plagued by issues for years. Problems such as poor record-keeping and communication by loan servicers, coupled with insufficient government oversight, led many borrowers down costly deferment or forbearance paths. Some also didn’t receive the student loan forgiveness they were entitled to under federal law.
  3. Remedying the Issues: The IDR Account Adjustment aims to address these long-standing problems. Under this program, the Education Department can credit borrowers with time towards their 20- or 25-year forgiveness term (or 10 years for public service borrowers pursuing PSLF), even for periods of repayment under various plans and some past deferment and forbearance periods.

Regarding the latest round of approvals:

  • In July, over 800,000 borrowers were approved for $39 billion in student loan forgiveness under the IDR Account Adjustment, with most receiving discharges in the following month.
  • The Education Department is continuously assessing borrowers for forgiveness eligibility under the IDR account adjustment, typically every two months.
  • In September, an additional 51,000 borrowers were approved for IDR student loan forgiveness totaling $2.8 billion.
  • Combined with previous data, the Biden administration has now approved nearly $42 billion in student loan forgiveness under the IDR Account Adjustment for almost 855,000 borrowers. Additionally, 53,000 borrowers were approved for $5.2 billion in student loan forgiveness through the PSLF program.
Student Loan Forgiveness
Source:Getty Images

What’s ahead:

  • Borrowers covered by the latest announcement could start receiving loan forgiveness this month, with student loan servicers notifying them of a discharge after October 22.
  • The Biden administration is actively working on a new, more comprehensive student loan forgiveness plan to replace the one struck down by the Supreme Court in June. Although details are emerging, this new program may offer relief to borrowers facing long-standing hardships and issues. However, it won’t be finalized or available until next year.
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Ingrid Mueller

Ingrid Mueller, a literary expert with a Ph.D. in Literature from Yale University, brings a touch of artistry to her writing. Her critical analyses and cultural insights provide a fresh perspective on trending news. Ingrid's articles are a treat for those seeking a deeper understanding of the world around them. Explore the trends through her unique lens.

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