In a significant move aimed at alleviating the burden of student loan debt, the Biden administration has announced the forgiveness of $39 billion in student loans. This groundbreaking initiative, which will benefit over 800,000 borrowers, marks a substantial step forward in President Joe Biden’s commitment to addressing the student debt crisis and creating a fairer and more accessible higher education system in the United States.
Borrowers are eligible for forgiveness if they have accumulated the equivalent of either 20 or 25 years of qualifying months.
“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 U.S. Secretary of Education Miguel Cardona. “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. This Administration will not stop fighting to level the playing field in higher education.”
Borrowers receiving notifications in the coming days include those 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 as a result of receiving credit toward IDR forgiveness for any of the following periods:
- 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.
- Any period in which a borrower spent 12 or more consecutive months in forbearance.
- Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance.
- Any month spent in deferment (except for in-school deferment) prior to 2013; and
- Any month spent in economic hardship or military deferments on or after January 1, 2013.
In addition, months described above that occurred prior to a loan consolidation will also be counted toward forgiveness.
The Department will continue to identify and notify borrowers who reach the applicable forgiveness thresholds (240 or 300 qualifying monthly payments, depending on their repayment plan and type of loan) every two months until next year when all borrowers who are not yet eligible for forgiveness will have their payment counts updated. Any month counted for this purpose can also be counted toward PSLF if the borrower documents qualifying employment for that same period.
Eligible borrowers will be informed by the Department starting today that they qualify for forgiveness without further action on their part. Discharges will begin 30 days after emails are sent. Borrowers who wish to opt out of the discharge for any reason should contact their loan servicer during this period. Borrowers will be notified by their servicer after their debt is discharged. Those receiving forgiveness will have repayment on their loans paused until their discharge is processed, while those who opt out of the discharge will return to repayment once payments resume.
Source: U.S. Department of Education
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