ED Announces $39 Billion in Student Loan Forgiveness to Over 800,00 Borrowers After Fixes to Income-Driven Repayment Plans
By Maria Carrasco, NASFAA Staff Reporter
The Department of Education (ED) on Friday announced that it will forgive $39 billion in federal student loan debt to 804,000 eligible borrowers enrolled in income-driven repayment plans.
Borrowers are eligible for loan forgiveness if they made either 20 or 25 years of monthly IDR payments, depending on the plan. Those borrowers will have their loans automatically discharged in the coming weeks and will be notified in the next few days, ED said.
The forgiveness is a result of “fixes” to “historical failures” of the federal student loan program in which qualifying payments made under IDR plans were not accounted for. ED first announced in April 2022 that it would perform a one-time adjustment to count some borrowers’ accounts in long-term forbearances toward IDR forgiveness and Public Service Loan Forgiveness (PSLF). ED previously said that the one-time adjustment would provide over 3.6 million borrowers at least three years of additional credit toward IDR forgiveness.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” said Education Secretary Miguel Cardona. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans. This administration will not stop fighting to level the playing field in higher education.”
In today’s announcement, ED reiterated that inaccurate payment counts have resulted in “borrowers losing hard-earned progress toward loan forgiveness.” To get borrowers closer to receive IDR loan forgiveness, ED’s adjustments now count periods of:
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Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the type of loan, or the repayment plan;
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Any period in which a borrower spent 12 or more consecutive months in forbearance;
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Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance;
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Any month spent in deferment (except for in-school deferment) prior to 2013; and
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Any month spent in economic hardship or military deferments on or after January 1, 2013.
Additionally, payments made during months with the new count periods that occurred prior to a loan consolidation will also be counted toward forgiveness, ED clarified.
“At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable,” Education Under Secretary James Kvaal said in a statement. "Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”
ED said it will continue to identify and notify borrowers who reach forgiveness every two months until next year, when all borrowers who are not yet eligible for forgiveness will have their payment counts updated. The newly eligible months can also be counted toward PSLF.
Borrowers who receive the forgiveness will have repayment on their loans paused until their discharge is processed. Borrowers who want to opt out of the automatic forgiveness should contact their loan servicers. They will return to repayment once student loan payments resume in the fall.
Rep. Virginia Foxx (R-N.C.), chairwoman of the House Committee on Education and the Workforce, said today’s announcement from ED is “trampling the rule of law, hurting borrowers, and abusing taxpayers to chase headlines.”
“Biden’s student loan scam is far from over,” Foxx said in a statement. “From day one, this administration has encouraged borrowers not to repay their loans and has expected taxpayers to foot the bill. Today’s celebration of counting no payments as payments is just the latest example of the ongoing delusion at the White House.”
Publication Date: 7/14/2023
Yolanda T | 7/18/2023 2:34:34 AM
The federal government’s right wing conservatives do not want to help with higher education initiatives and even though I know student borrowers have to begin making payments no one is discussing how the pandemic has not disappeared…..only from the headlines. That’s why this relief is so important.
David S | 7/17/2023 11:43:48 AM
At least Representative Foxx is crystal clear on how much she wants the federal government to help students.
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