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On July 14, 2023, the U.S. Department of Education released news that borrowers will begin to receive notification in the next few weeks of discharge of Federal student loans. The change will impact more than 804,000 borrowers and $39 billion in student debt.
This is a result of moves made by the Administration to confirm that student loan borrowers carry a correct number of monthly payments under income-driven repayment (IDR) plans. This most recent action greater develops upon the Biden-Harris Administration’s support for student debt relief.
Over 800,000 borrowers will receive automatic student loan forgiveness
The forgiveness is occurring in response primarily due to the choice made by the Supreme Court in late June not to pass President Biden’s student loan forgiveness program, which would have canceled up to $20,000 of debt for around 43 million borrowers.
Instead, the Department of Education is addressing pre-existing issues with the income-driven repayment (IDR) process to confirm that all borrowers’ payments are accurately accounted for that would qualify them for loan forgiveness.
This choice reinforces The Administration’s intention to right any wrongs made historically and handle previous failures made that directly impact qualifying payments. According to a Department press release, these changes will impact borrowers under IDR and address borrowers that should have been moved closer to forgiveness but were not accounted for.
These historical inaccuracies were initially addressed in April of 2022 by the Administration via the payment count adjustment. Based on regulations enforced by the Higher Education Act, a borrower is eligible once they make 240 or 300 monthly payments – equal to 20 or 25 years – on an IDR or standard repayment plan. The exact number of required payments will vary depending on when the loan was first taken out, the type of loan and the specific IDR plan that enrollment is in.
“For far too long,” said U.S. Secretary of Education Miguel Cardona, “borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness.”
He explains this is just the first step in making amendments to past mistakes by providing $39 billion in relief for another 804,000 borrowers. The current administration believes this choice will ensure that all students get the forgiveness they deserve.
Cardona concludes, “This Administration will not stop fighting to level the playing field in higher education.”
Who is eligible for student loan forgiveness?
Those who meet the requirements will be notified in the coming days. Specifically, those who hold Direct Loans or Federal Family Education Loans (FFEL) held by the Department (including Parent PLUS loans) who have reached the necessary forgiveness threshold upon receiving IDR credit during any of the following periods of time.
- Any month of active repayment, including partial or late payments, regardless of loan type or term.
- Any period of time that a borrower spent 12 or more consecutive months in payment forbearance.
- The months in forbearance that a borrower spent 36 or more consecutive months in forbearance.
- The months spent in deferment before 2013 (not including in-school deferment).
- Months spent in military deferment or economic hardship on or after January 1, 2013.
What can student loan borrowers expect?
Over the coming weeks, the Department will contact borrowers who qualify. There is no further action that the borrowers themselves must take; however, borrowers should regularly check for communication from the Department of Education throughout the coming weeks.
If borrowers prefer to withdraw the discharge of their loans, they can directly contact their loan servicing company. Once the debt is discharged, borrowers will receive confirmation from their servicer, which will then begin to occur 30 days following the initial confirmation email.
Those who opt to discharge their forgiveness amount will be required to make payments in their Federal loans once the process is complete. However, confirming with your servicer is best so you don’t fall behind on your existing loan payments.