Last week, the Department of Education issued a press release announcing plans to forgive over $39 billion in federal student loans for 800,000+ borrowers, providing relief and addressing administrative shortcomings to rectify past injustices. Miguel Cardona, Secretary of Education stated for too long, borrowers have fallen through the cracks.
"For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,"U.S. Secretary of Education Miguel Cardona said.
According to a press release issued on July 14, in a substantial move, the Department of Education revealed on July 14, 2023, that it would begin notifying more than 804,000 borrowers that they qualify for automatic forgiveness of their federal student loans, totaling $39 billion. Eligible borrowers will no longer be required to take any further action to have their debts discharged.
"For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness," remarked U.S. Secretary of Education Miguel Cardona. "Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers."
According to the press release, the decision to automatically discharge loans is part of the Biden-Harris Administration's ongoing efforts to rectify past issues and provide relief to borrowers. The move addresses historical inaccuracies in the count of payments that qualify for forgiveness under Income-Driven Repayment (IDR) plans.
As stated in the release, under the Higher Education Act and the Department's regulations, borrowers become eligible for forgiveness after making either 240 or 300 monthly payments, depending on the type of loan, repayment plan, and when the loan was taken out, about or 20-25 years. However, inaccurate payment counts resulted in many borrowers losing progress toward loan forgiveness. The Department's action also addresses concerns about loan servicers placing borrowers into forbearance, contrary to Department rules.
The Department of Education has previously discharged loans for borrowers who reached forgiveness for Public Service Loan Forgiveness (PSLF) due to these changes. Moving forward, the Department will continue to identify and notify borrowers who reach the applicable forgiveness thresholds every two months until next year, ensuring all eligible borrowers have their payment counts updated.
"Borrowers receiving notifications in the coming days include those with Direct Loans or Federal Family Education Loans held by the Department, including Parent PLUS loans of either type," explained the Department in a press release. The forgiveness threshold is met when borrowers have credit toward IDR forgiveness for various periods, such as any repayment status month, any 12 or more consecutive months in forbearance, any 36 or more cumulative months in forbearance, any pre-2013 deferment month (except for in-school deferment), and any month in economic hardship or military deferment on or after January 1, 2013. The months described above that occurred before loan consolidation will also count toward forgiveness, according to the press release.
"By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans. This Administration will not stop fighting to level the playing field in higher education," Secretary Cardona said.
The Department of Education's move to forgive $39 billion in federal student loans brings much-needed relief to over 800,000 borrowers who have faced administrative shortcomings for far too long.
