The Biden-Harris Administration has approved 804,000 borrowers for $39 billion in federal student loans for automatic discharge this summer. Eligible borrowers will not have to take any action to receive this income-driven repayment (IDR) forgiveness.
In Tennessee, nearly 17,000 borrowers will receive more than $867 million in IDR forgiveness in the coming weeks.
Statement from President Joe Biden: “I have long said that college should be a ticket to the middle class - not a burden that weighs down on families for decades.
“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. These borrowers will join the millions of people that my Administration has provided relief to over the past two years – resulting in over $116 billion in loan relief to over 3 million borrowers under my Administration.
“But we’re not stopping there. My Administration has worked hard to secure the largest increases to Pell Grants in a decade, fixed broken loan programs such as Public Service Loan Forgiveness, and created a new income-driven repayment plan that will cut undergraduate loan payments in half and bring monthly payments to zero for low-income borrowers. And, when the Supreme Court made the wrong decision, I immediately announced a new plan to open an alternative path to relief for as many borrowers as possible, as soon as possible.
“Republican lawmakers – who had no problem with the government forgiving millions of dollars of their own business loans – have tried everything they can to stop me from providing relief to hardworking Americans. Some are even objecting to the actions we announced today, which follows through on relief borrowers were promised, but never given, even when they had been making payments for decades. The hypocrisy is stunning, and the disregard for working and middle-class families is outrageous.
“As long as I’m in office, I will continue to work to bring the promise of college to every American.”
More information about these discharges HERE.
ADDITIONAL BACKGROUND - An IDR plan sets a borrower’s monthly student loan payment at an amount intended to be affordable based on that borrower’s income and family size. IDR plans also offer forgiveness of any remaining loan balance after borrowers make 240 or 300 monthly payments, which corresponds to 20 or 25 years. The number of required payments depends on when a borrower first took out the loans, the type of loans they borrowed, and the IDR payment plan in which the borrower is enrolled.
Before the Biden-Harris Administration’s improvements to the IDR forgiveness program, qualifying payments that should have moved borrowers on IDR plans closer to forgiveness were not counted properly. Inaccurate payment counts have resulted in borrowers losing hard-earned progress toward loan forgiveness. Some borrowers were steered into forbearances and other statuses instead of toward IDR in ways that ran counter to our policies. Now, the Department is ensuring all borrowers have an accurate count of the number of monthly payments that qualify toward IDR forgiveness and is discharging the loans of borrowers who have met the requirements.
The Department has begun notifying eligible borrowers about their discharges. The emails from Federal Student Aid inform borrowers their discharges will start 30 days from the notification date. The emails also explain that borrowers who wish to opt out of the discharge for any reason should contact their loan servicer during this period. Borrowers will be notified by their loan servicer after their debt is discharged. Those receiving forgiveness will have repayment on their loans paused until their discharge is processed; borrowers who opt out of the discharge will return to repayment once payments resume this fall.
The Department is taking steps to help borrowers access affordable payments going forward, including recently creating the most affordable payment plan ever—the Saving on a Valuable Education (SAVE) IDR plan. The SAVE plan will cut payments on undergraduate loans in half compared to other IDR plans, ensure that borrowers never see their balance grow as long as they keep up with their required payments, and protect more of a borrower’s income for basic needs. Borrowers can visit StudentAid.gov/save for details about this plan.
Source: U.S. Department of Education
