The Student Loan Forgiveness comes as a result of the Education Department‘s income-driven repayment (IDR) account adjustment.
On July 14, a significant step was taken in the Student Loan Forgiveness program as 804,000 longtime student loan borrowers received the news that their remaining debt of $39 billion would be forgiven
Consequently, many borrowers are now three years closer to achieving IDR forgiveness, and some will see their loans forgiven entirely.
Department of Education Under Secretary James Kvaal expressed satisfaction in fulfilling the government’s commitment to borrowers who had completed decades of repayment, saying, “At the start of this Administration, millions of borrowers had earned Student Loan Forgiveness but never received it. That’s unacceptable.”
The Student Loan Forgiveness program’s impact is substantial, as it encompasses more than 4.4 million borrowers who have diligently repaid their loans for over 20 years, with 2.3 million among them never defaulting or being delinquent, according to data from the Education Department provided to Sen. Elizabeth Warren.
While President Biden’s up-to-$20,000 student debt cancellation plan was struck down by the Supreme Court, the IDR account adjustment remains uncontested since its introduction in April 2022
Experts like Mike Pierce, executive director of the Student Borrower Protection Center (SBPC), believe that future legal challenges are unlikely.
Under the IDR account adjustment, Student Loan Forgiveness needs to meet specific criteria to qualify for forgiveness. For instance, undergraduate loan borrowers must have made at least 240 monthly payments, while some graduate loan borrowers require at least 300 payments to be eligible for forgiveness.
The account adjustment counts various periods towards the required payment count, including any months in repayment, forbearance, or qualifying deferment before a loan consolidation.
The Education Department plans to apply the account adjustment by the end of 2023 for all borrowers who have reached a sufficient number of payments for Student Loan Forgiveness. Other borrowers will receive an additional three years of credit toward IDR loan forgiveness in 2024.
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