The Education Department is currently notifying thousands of borrowers that they qualify for student loan forgiveness under a temporary Biden administration program designed to provide relief for those who have older student loans.
“For years, millions of eligible borrowers were unable to access the student debt relief they qualified for,” said Education Secretary Miguel Cardona in a statement last month when this latest announcement of loan forgivness was made. “But that’s all changed thanks to President Biden and this Administration’s relentless efforts to fix the broken student loan system.”
Here’s the latest.
Nearly $3 Billion In Student Loan Forgiveness
“Congratulations! The Biden-Harris Administration has forgiven your federal student loan(s) listed below in full,” reads the notices being sent to borrowers this week.
The relief is through the IDR Account Adjustment, a temporary program whereby the Education Department can count past loan periods toward a borrower’s student loan forgiveness term under income-driven repayment plans, which is either 20 or 25 years. These prior periods can include many earlier months and years of repayment, as well as certain periods spent in a non-payment status (like some kinds of deferments and forbearances). Borrowers can qualify for student loan forgiveness even if they are not currently repaying their loans under an IDR plan.
The account adjustment is being implemented in phases. The Education Department’s current focus is on borrowers who, as a result of the retroactive credit, have reached the thresholds for student loan forgiveness in accordance with the 20- and 25-year IDR repayment terms. The first wave of borrowers received student loan forgiveness over the summer. The current group getting discharges this week represents a second batch of approximately 51,000 individuals. The department estimates that $2.8 billion in federal student loans are being forgiven for these borrowers in the latest round.
“This debt relief was processed as part of the Biden-Harris Administration’s one-time account adjustment because your student loan(s) have been in repayment of at least 20 or 25 years,” reads the notice. “An adjustment to your account updated the number of payments that qualify towards income-driven repayment (IDR) forgiveness. “
The notices — which are sometimes being sent by email — may seem too good to be true, particularly since many of these borrowers did not need to specifically apply for this relief. But they are very real. Some borrowers may not be sent an email, and instead will need to check their online account inbox within their loan servicer account to find the notice.
Who Else Qualifies For Student Loan Forgiveness
So far, more than 850,000 borrowers have been approved for IDR student loan forgiveness under the Biden administration’s adjustment program, with over $40 billion in discharges pending or completed so far.
Borrowers can also receive credit toward student loan forgiveness under the Public Service Loan Forgiveness program as part of this same account adjustment. PSLF is geared toward borrowers who work as W-2 employees for 30 hours per week or more for qualifying nonprofit and public organizations. The Education Department can go back as far as October 2007 to credit borrowers with time toward the 120 payments — or 10 years — required to receive forgiveness under that program. An additional 715,000 borrowers have already received student loan forgiveness through PSLF under both the IDR Account Adjustment and an earlier PSLF waiver that ended last year.
What Else Borrowers Should Know About Loan Forgiveness Through The Account Adjustment
Borrowers who already have Direct federal student loans can receive the IDR Account Adjustment benefits automatically. No application is required.
But those who have commercially-held FFEL loans, school-held Perkins loans, and other federal loans not owned by the U.S. Department of Education will have to consolidate their loans via the federal Direct consolidation loan program. Borrowers who have different lengths of time in repayment on individual federal loans may also want to consider Direct loan consolidation; under the temporary flexibilities of the the account adjustment, those who consolidate loans with different histories can receive the maximum amount of IDR and PSLF credit associated with the loan that has the longest history.
The deadline for consolidating via the Direct loan program to benefit from the adjustment is December 31, 2023. However, advocates are pushing the Education Department to extend that deadline. Borrowers should review the department’s detailed web guidance summarizing the program, and should periodically go back to that website to check for updates, including possible deadline changes.
Those who are seeking PSLF credit must also certify their public service employment by completing a PSLF employment certification. This can be done online via the Education Department’s PSLF Help Tool, and should also be completed by the December 31 deadline.
The Biden administraiton is currently focusing on providing discharges to borrowers who have reached the IDR and PSLF thresholds for student loan forgiveness. But borrowers can still keep and retain their IDR and PSLF “credit” even if they fall short of the milestone for immediate loan forgiveness. The Education Department will be publishing IDR payment counts sometime in 2024. Those who receive IDR credit can advance their progress toward eventual loan forgiveness, but will need to continue making payments under an IDR plan for the remainder of the time needed until they qualify for a discharge.
A conservative-leaning organization has filed a legal challenge seeking to block the account adjustment. A federal district court judge dismissed the lawsuit in August, but the challengers have now appealed to the Sixth Circuit Court of Appeals.