Biden Administration to Cancel $39 Billion in Student Loan Debt for 804,000 Borrowers
In a recent announcement on July 14, the Biden administration unveiled plans to automatically eliminate $39 billion in debt for 804,000 student loan borrowers within the upcoming weeks.
This initiative comes in response to the June 30 Supreme Court decision, which struck down President Joe Biden’s original student loan forgiveness program.
The Department of Education promptly sent out email notifications, notifying eligible borrowers of their qualification for debt cancellation. However, if you haven’t received an email yet, there is still a chance that you might qualify for the forgiveness program.
These loans stem from the efforts of the Biden-Harris Administration to ensure all borrowers have accurate records of the number of monthly payments qualifying for forgiveness under income-driven repayment (IDR) plans.
Eligibility for forgiveness requires the accumulation of either 20 or 25 years of qualifying months, depending on the borrower’s situation.
Forbes explained that even borrowers who don’t meet the requirements for loan forgiveness can still benefit from the program. They may receive retroactive credits towards their 20- or 25-year forgiveness term, which can significantly reduce their repayment period and progress them toward eventual debt relief.
The Department of Education is currently prioritizing borrowers who have already reached the IDR threshold for student loan forgiveness.
Those who are still short of the milestone should receive more specific details about their standing in 2024. Furthermore, the Department will continue identifying and notifying borrowers who reach applicable forgiveness thresholds every two months until next year, ensuring all eligible borrowers have updated payment counts.
Moreover, any month counted towards IDR forgiveness can also count towards Public Service Loan Forgiveness (PSLF) if the borrower can document qualifying employment during that period.
Borrowers who have received notifications about their eligibility since July 14 don’t need to take any further action. This includes borrowers with Direct Loans or Federal Family Education Loans held by the Department (including Parent PLUS loans of either type) who have reached the necessary forgiveness threshold due to receiving credit towards IDR forgiveness for specific periods.
However, borrowers who meet these requirements need to apply for the IDR program. For example, commercially held FFEL loans can only benefit from the IDR Account Adjustment if they consolidate their loans by the end of 2023, according to the Student Aid website.
In light of potential legal challenges against the waiver, borrowers with commercially-held FFEL loans are strongly encouraged to consolidate their loans immediately, as advised by Student Loan Planner.