Student loan forgiveness starts for 800,000 borrowers: Hereâs who qualifies
The Department of Education has started the process of addressing balances for some 800,000 borrowers with some $39 billion in federal student loan debt.
The one-time loan forgiveness covers people who have been paying through income-driven repayment, or IDR, plans that typically allow debts to be forgiven once a person has paid for 20 or 25 years, according to the plan. Because of errors in tracking payments, however, some borrowers were mistakenly left paying beyond their end dates or were placed into forbearance by loan service providers, a violation of Department of Education rules.
The result was more than 804,000 borrowers “never got the credit they earned and never saw the forgiveness they were promised – even after making payments for decades,” President Biden said in a statement.
“On day one of my administration, I promised to fight for hardworking families and to fix problems in the student loan system that have been failing borrowers for too long,” Biden said. “I’m proud that my administration is delivering on that promise and has already approved over $116 billion in debt cancellation for 3.4 million Americans – no matter how many lawsuits, challenges, or roadblocks Republican elected officials or special interests put in our way.”
Qualified borrowers are currently being notified via email from their loan servicing company with the process continuing for several weeks to months. Of those who qualify, more than 614,000 will have all their remaining federal loan debt canceled.
The measures fall short, however, of the widespread student loan forgiveness championed by the Biden administration before being struck down by the U.S. Supreme Court. That plan would have wiped out up to $20,000 for some federal loan holders, forgiveness that would have come after a three-year moratorium on interest and payments due to the COVID-19 pandemic. Instead, interest on loans will restart Sept. 1 with payments restarting in October.
About 44 million Americans have student loans with the average borrower owing $37,787.