Biden-Harris Administration to Provide 804,000 Borrowers with $39 Billion in Automatic Loan Forgiveness as a Result of Fixes to Income Driven Repayment Plans

Staff report

Washington, D.C. – The Biden-Harris Administration has announced that more than 804,000 borrowers will receive automatic loan forgiveness totaling $39 billion in the coming weeks. This brings the total student loan forgiveness approved by the administration to over $116.6 billion for more than 3.4 million borrowers.

The loan discharges are a direct result of fixes implemented by the Biden-Harris Administration to ensure accurate tracking of monthly payments that qualify for forgiveness under income-driven repayment (IDR) plans. These fixes address previous failures in the administration of the Federal student loan program, where qualifying payments made under IDR plans were not properly accounted for. Borrowers become eligible for forgiveness after accumulating the equivalent of 20 or 25 years of qualifying months.

U.S. Secretary of Education Miguel Cardona highlighted the importance of addressing the flaws in the system and providing borrowers with the forgiveness they deserve. He stated, “Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers. 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.”

The action follows the payment count adjustment announced by the Biden-Harris Administration in April 2022. This adjustment aimed to rectify historical inaccuracies in counting payments that qualify for forgiveness under IDR plans. Inaccurate payment counts resulted in borrowers losing progress toward loan forgiveness. The action also addresses concerns regarding loan servicers putting borrowers into forbearance in violation of Department rules.

Under Secretary James Kvaal emphasized the commitment to fulfill the promises made to borrowers who have diligently repaid their loans, stating, “Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”

The borrowers who will receive notifications in the coming days include those with Direct Loans or Federal Family Education Loans held by the Department, including Parent PLUS loans. These borrowers have reached the necessary forgiveness threshold due to credit received toward IDR forgiveness during various periods, such as repayment status, forbearance, deferment, economic hardship, or military deferments.

The Department will continue to identify and notify borrowers who reach the forgiveness thresholds every two months until next year, ensuring all borrowers receive updated payment counts. Borrowers will be informed of their eligibility for forgiveness without any further action required. Discharges will commence 30 days after emails are sent, and borrowers who wish to opt out of the discharge can contact their loan servicer. Repayment will be paused for those receiving forgiveness until the discharge is processed.

The Biden-Harris Administration’s efforts to provide student debt relief have included $45 billion for 653,800 public servants through improvements to Public Service Loan Forgiveness (PSLF), $5 billion for 491,000 borrowers with a total and permanent disability, and $22 billion for nearly 1.3 million borrowers affected by school closures or fraudulent practices.

Vice President Kamala Harris expressed the administration’s commitment to reducing student loan debt and providing relief to borrowers. She emphasized the goal of ensuring that Americans can pursue postsecondary education without the burden of unmanageable student loan debt.

The administration has also finalized the new income-driven repayment plan, known as the Saving on a Valuable Education (SAVE) plan, which will cut undergraduate loan payments in half compared to other IDR plans. The plan will protect a larger portion of borrowers’ income for basic needs and will begin providing benefits this summer.

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