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More Than 804,000 Borrowers Qualify for Student Loan Debt Relief. Are You One of Them?

More Than 804,000 Borrowers Qualify for Student Loan Debt Relief. Are You One of Them?

The Motley Fool

Matthew Frankel
August 22, 2023
  • The Biden Administration is forgiving $39 billion in federal student loan debt for an estimated 804,000 borrowers.
  • This is the result of an effort to fix past mistakes in the income-driven repayment-plan system.
  • The $39 billion is mainly going to people who have been paying for more than 20 years, but other borrowers could now see forgiveness sooner than anticipated.
The Department of Education is forgiving $39 billion in student loan debt, and even more relief could be on the way.
The Department of Education recently announced it would be forgiving $39 billion in student loan debt for 804,000 federal student loan borrowers. Although the forgiveness plan has faced legal challenges, a federal judge has already dismissed the lawsuit seeking to block it, so it can now proceed as planned.
Who qualifies for this loan forgiveness, and why are so many student loans suddenly being forgiven? Here’s a rundown of who might be about to have their student loan balances wiped clean and why you might benefit from this forgiveness initiative, even if your loans aren’t being forgiven right away.
Why are 804,000 student loan borrowers about to get forgiveness?
Millions of federal student loan borrowers are enrolled in income-driven repayment (IDR) plans. These plans limit borrowers’ monthly payments to a certain percentage of their discretionary income. In addition, income-driven plans promise to forgive any remaining balance after either 20 or 25 years of repayment, depending on the specific repayment plan and the types of loans the borrower has.
One big problem is that many borrowers have been paying for much longer than they have been given credit for. To fix this, the Department of Education is in the process of conducting a one-time account adjustment that will credit borrowers for certain periods that had previously not been considered “qualified payments” for the purpose of IDR loan forgiveness.

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