Over 800,000 Borrowers to Benefit from $39 Billion Loan Forgiveness
See if you Qualify If You Have Student Loans
In a groundbreaking move, the Joe Biden Administration will be notifying more than 804,000 borrowers that they are entitled to an automatic discharge of their federal student loans, amounting to a total of $39 billion.
This announcement signifies an unprecedented level of student loan forgiveness approved, which now stands at over $116.6 billion, benefitting more than 3.4 million borrowers.
This monumental wave of discharges is the outcome of amendments made by the administration to ensure that the count of qualifying monthly payments toward forgiveness under income-driven repayment (IDR) plans is accurate. These corrective measures are the Department of Education's response to historic inadequacies in administering the federal student loan program.
"The function of education is to teach one to think intensively and to think critically. Intelligence plus character - that is the goal of true education." - Martin Luther King, Jr.
For years, errors in tracking borrowers' progress towards loan forgiveness have persisted, and for too long, borrowers have found themselves lost in a broken system.
The administration's recent action is part of the payment count adjustment declared in April 2022, addressing historical inaccuracies in payment counts under IDR plans. According to the Higher Education Act and the Department's regulations, a borrower qualifies for forgiveness after making either 240 or 300 monthly payments—equal to 20 or 25 years—on an IDR plan or the standard repayment plan. The number of payments required depends on when the borrower initially took out loans, the type of loans, and the IDR payment plan in which the borrower is enrolled.
The action also addresses concerns about loan servicers’ practices that improperly put borrowers into forbearance, violating the Department's rules. The Department has previously initiated loan discharges for borrowers who reached forgiveness for Public Service Loan Forgiveness (PSLF) through these changes.
Under Secretary James Kvaal reflects on the injustices of the past, saying, "At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable. Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”
The forthcoming notifications pertain to borrowers with Direct Loans or Federal Family Education Loans held by the Department, including Parent PLUS loans of either type. These borrowers have reached the necessary forgiveness threshold due to the crediting of specific periods toward IDR forgiveness:
1. 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;
2. Any period in which a borrower spent 12 or more consecutive months in forbearance;
3. Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance;
4. Any month spent in deferment (except for in-school deferment) prior to 2013; and
5. Any month spent in economic hardship or military deferments on or after January 1, 2013.
Additionally, months that occurred prior to a loan consolidation will also be counted toward forgiveness.
Going forward, the Department will continue to identify and notify borrowers who reach the applicable forgiveness thresholds (240 or 300 qualifying monthly payments) every two months until next year. After this point, all borrowers not yet eligible for forgiveness will have their payment counts updated. Borrowers will receive notification from the Department starting today, with automatic discharges beginning 30 days after these emails are sent out.
Today’s action builds on the Biden-Harris Administration’s unparalleled record of student debt relief to date. So far, this includes $45 billion for 653,800 public servants through improvements to PSLF, $10.5 billion for 491,000 borrowers who have a total and permanent disability, and $22 billion for nearly 1.3 million borrowers who were deceived by their schools, had their schools suddenly close, or were covered by related court settlements.
Alongside these initiatives, President Biden and the Department have also taken steps to make payments more affordable for borrowers in the future. The Department recently issued final regulations to introduce the Saving on a Valuable Education (SAVE) plan. The SAVE plan aims to reduce payments on undergraduate loans by half compared to other IDR plans, ensuring that borrowers' balances don't grow as long as they maintain their required payments and protecting more of a borrower’s income for essential needs. This plan will soon become available this summer, and it marks yet another positive step in rectifying the long-standing issues in the student loan system.
