The latest update in the student loan debt forgiveness saga comes after fixes to the Income-Driven Repayment (IDR) plans were implemented by the Biden-Harris Administration.
IDR plans are designed to provide lower monthly payments for borrowers that appropriately fit their income. Borrowers are eligible for forgiveness under an IDR plan with the equivalent of 20 or 25 years of qualifying monthly payments.
The fixes made by the Biden-Harris Administration more accurately reflect how many qualifying payments were made by borrowers, as many payments were reportedly not accurately accounted for. Now, nearly 4,000 Utahns will receive more than $200 million in IDR forgiveness over the coming weeks, after making enough qualifying monthly payments towards their loan.
“I have long said that college should be a ticket to the middle class – not a burden that weighs down on families for decades,” said President Joe Biden. “My Administration is delivering on that commitment. Starting today, over 800,000 student loan borrowers who have been repaying their loans for 20 years or more will see $39 billion of their loans discharged because of steps my Administration took to fix failures of the past.”
The U.S. Department of Education will begin notifying borrowers of their automatic loan forgiveness on Friday. Every two months until next year, the Department will continue to identify and notify borrowers who reach the applicable forgiveness threshold of 240 or 300 qualifying monthly payments, depending on the repayment plan and type of loan.
By next year, all borrowers who are not yet eligible for forgiveness will have their payment counts updated.
President Biden said as long as he is in office, he will continue to work to bring the promise of college to every American.
At the end of June, the U.S. Supreme Court denied Biden’s plan for student loan forgiveness which would have eliminated up to $20,000 in student debt for eligible borrowers. Biden and his Administration has not yet backed down on attempting to deliver one of the president’s key campaign promises.
Under the Biden Administration, the U.S. Department of Education recently issued final regulations for creating the Saving on a Valuable Education (SAVE) plan. According to the Administration, the SAVE plan will cut payments on undergraduate loans in half compared to other IDR plans, and ensure a balance will not grow so long as the borrower keeps up with their payments.
Benefits of the SAVE plan are expected to become available later this year.