The Biden administration has begun sending student loan forgiveness approval emails to borrowers approved for discharges under a temporary account adjustment initiative. This is the second wave of loan forgiveness approvals under the program. Hundreds of thousands of borrowers were initially approved over the summer.
Here’s the latest.
Student Loan Forgiveness Under Biden’s Account Adjustment
Borrowers are receiving student loan forgiveness under the IDR Account Adjustment. The initiative, which the Biden administration first announced last year, was established to address longstanding problems with the administering of Income-Driven Repayment plans. IDR plans are designed to provide affordable monthly payments to borrowers based on their income and family size, and can ultimately result in loan forgiveness after 20 or 25 years in the program. Borrowers who work in nonprofit or government careers can receive student loan forgiveness even sooner under the Public Service Loan Forgiveness program.
But IDR plans were plagued by problems for many years. Loan servicing disruptions and poor oversight by the Education Department resulted in many borrowers being steered to less helpful programs, like forbearances. Other borrowers were harmed by improper record-keeping.
Under the IDR Account Adjustment, the Biden administration will issue one-time IDR “credit” that will allow past loan periods that normally wouldn’t have counted toward student loan forgiveness to qualify. Most past periods of repayment on nearly any kind of federal student loan after July 1994 can be counted, as well as certain qualifying periods of deferment and forbearance. The periods can also potentially count toward Public Service Loan Forgiveness, as well.
Second Wave Of Student Loan Forgiveness Approvals Under Biden Adjustment
Last Friday, the Education Department began sending emails to borrowers approved for student loan forgiveness under the IDR Account Adjustment.
“You are now eligible to have some or all of your student loans forgiven because you have reached the necessary 240- or 300-months’ of payments under IDR,” reads the email. “The U.S. Department of Education will work with your servicer to process your IDR forgiveness over the next several months.”
The emails represent the second batch of student loan forgiveness approvals under the IDR Account Adjustment. In July, over 800,000 borrowers in the initial wave were notified that they qualified for student loan forgiveness. These borrowers collectively received $39 billion in student loan forgiveness in August.
The Biden administration has not yet released data on the latest round of student loan forgiveness under the adjustment.
Next Steps For Borrowers Waiting For Student Loan Forgiveness
Borrowers who are receiving the latest student loan forgiveness approval letters should be notified by their loan servicer when their balances have been discharged. This will occur in late October at the earliest.
“The U.S. Department of Education will work with your servicer to process your IDR forgiveness over the next several months,” reads the email. “If you would like to opt out of IDR forgiveness for any reason, contact your loan servicer no later than 10/22/2023 and tell them that you are not interested in receiving IDR forgiveness. Some reasons why you might want to consider opting out include concerns about a potential state tax liability.”
After October 22nd, the Education Department will coordinate with loan servicers to effectuate the discharge. “Your loan servicer(s) will notify you if and when your IDR forgiveness has been processed. It may take some time,” says the email.
The Education Department is expected to run the IDR Account Adjustment again by the end of this year. Borrowers who receive IDR credit under the adjustment, but fall short of the threshold for immediate student loan forgiveness, should be notified of their IDR payment counts sometime in 2024. These borrowers may want to consider repaying their loans under the new SAVE plan, which the Biden administration is touting as the most affordable IDR program ever.
Further Student Loan Forgiveness Reading
$22 Billion In Student Loan Forgiveness For Defrauded Borrowers, With More Just Approved
260,000 Approved For Student Loan Forgiveness Under Settlement, But Some Face Hurdles
$10 Billion In Student Loan Forgiveness Approved Under Overhaul For Borrowers With Medical Issues
Student Loan Forgiveness Proceeds And Payments ‘Cut In Half,’ But System Buckles
Read the full article here
