The Biden administration is forgiving $39 billion in student loans for 804,000 borrowers. The loans will be automatically discharged in a matter of weeks.
The Department of Education said the forgiveness fixes miscalculations for people on income-driven repayment plans. Those borrowers had to make 20 to 25 years of payments, or 240 to 300 qualifying monthly payments. The department will now count certain time periods toward the total in what it said was a fix to miscalculations.
Borrowers will now receive credit for any month they made a payment, even if it was late or partial, during periods when the borrower was in forbearance or deferment, or any month spent in economic hardship or military deferments.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Secretary of Education Miguel Cardona said in a statement.
Qualifying loans include Direct Loans or Federal Family Education Loans held by the department, including Parent PLUS loans.
“Today we are holding up the bargain we offered borrowers who have completed decades of repayment,” Under Secretary James Kavaal said in a statement.
The department will continue to notify people who reach the qualifying number of monthly payments every two months until next year, at which time all borrowers who have not yet qualified will have their payment counts updated. These guidelines also apply to those making payments under the Public Service Loan Forgiveness plan.
The Biden administration has now forgiven $116 billion in loans for 3.4 million people, including those who are disabled, in public service, or were cheated or defrauded by schools including for-profit colleges like University of Phoenix or DeVry University.
