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160,000 Borrowers Just Got Their Loans Forgiven: Could You Be Next?

The Biden administration approved $7.7 billion in targeted student loan forgiveness last week for more than 160,000 borrowers. This represents the latest batch of debt relief approvals under several different initiatives and comes as officials work on finalizing plans for a new loan forgiveness program.

“Another 160,000 borrowers and their families will get some much-needed relief thanks to the continued efforts of the Biden-Harris Administration to fix the broken student loan system,” said U.S. Under Secretary of Education James Kvaal in a statement. “We congratulate those borrowers on their due forgiveness and we will continue to work to deliver relief to others.”  

Education Department officials estimate that nearly 10% of borrowers have received student loan forgiveness under Biden administration initiatives. 

“One out of every 10 federal student loan borrowers approved for debt relief means one out of every 10 borrowers now has financial breathing room and a burden lifted,” said Education Secretary Miguel Cardona.

Here’s a breakdown of who just got student loan forgiveness and how borrowers may benefit from a new program set to be released later this year.

IDR adjustment provides $1.9 billion in student loan forgiveness

More than 39,000 borrowers were approved for loan forgiveness under the IDR account adjustment. The IDR adjustment is a temporary Biden administration program designed to address historic problems with income-driven repayment (IDR) plans. 

Under the initiative, the Education Department can count past loan periods toward 20-year or 25-year IDR loan forgiveness that wouldn’t have been credited under the original program rules. This can include payments made under other repayment plans and certain periods of deferment and forbearance

Borrowers who receive enough credit to reach the milestone qualifying them for loan forgiveness would receive a discharge. The latest wave of approvals totaled nearly $2 billion in student loan forgiveness, according to the department.

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Deadline to qualify for the IDR adjustment was just extended

While Direct loan borrowers can receive the benefits of the IDR account adjustment automatically, those with commercially owned FFEL loans, HEAL loans and Perkins loans not held by the Education Department must consolidate their loans through the federal Direct consolidation program to qualify. 

The deadline to apply for a Direct consolidation loan had been April 30, 2024. But the Biden administration extended the deadline to June 30, 2024, giving borrowers more time to consolidate if they need to. 

The department is expected to complete implementing the adjustment this fall. At that point, borrowers who don’t qualify for immediate loan forgiveness should be able to view their IDR progress through a new dashboard at StudentAid.gov.

Earlier this month, a federal appeals court rejected a legal challenge seeking to block the benefits of the IDR account adjustment, handing borrowers a significant victory and allowing relief under the program to continue. 

It is unclear if the challengers will seek an additional appeal. 

PSLF program delivers $5.2 billion in forgiveness

The administration also approved $5.2 billion in loan forgiveness for nearly 70,000 borrowers through the Public Service Loan Forgiveness (PSLF) program. PSLF can wipe out federal student loan debt for borrowers who pursue careers in the nonprofit or public sector in as little as 10 years. 

Related: Public Service Loan Forgiveness FAQ: 40 Tips to Save Thousands

Like IDR, the PSLF program has been plagued by administrative problems since its inception. Only a few thousand borrowers had received PSLF discharges as of January 2021.

After President Biden took office, the administration implemented multiple initiatives designed to remedy historical PSLF issues, including the Limited PSLF Waiver (which ended in October 2022) and the IDR account adjustment, which is ongoing and extends many of the Waiver’s benefits. The administration also enacted new PSLF regulations designed to make it easier for borrowers to qualify for PSLF and receive loan forgiveness benefits going forward.

PSLF servicing temporarily suspended during the transfer to StudentAid.gov

Following this latest batch of approvals, loan forgiveness processing under the PSLF program will be temporarily suspended. The Education Department is transferring PSLF servicing operations from MOHELA — which had taken over the PSLF program from FedLoan Servicing — to StudentAid.gov. 

MOHELA will continue to service the loans for many borrowers, but when the transition is completed this July, borrowers must access their PSLF through their StudentAid.gov account. In the interim, no PSLF forms will be processed, and no loan forgiveness will be approved. Processing should resume later this summer.

Related: How the MOHELA Servicer Transfer Affects You

SAVE plan provides $613 million in early forgiveness

The Education Department also approved more than half a billion in so-called “early” student loan forgiveness for 54,300 borrowers under the Saving on a Valuable Education (SAVE) plan. 

SAVE is a new IDR option released by the Biden administration last fall. It offers lower payments and a generous interest subsidy that periodically wipes out excess interest accrual. Additionally, SAVE can shorten a borrower's loan forgiveness timeline to as little as 10 years if they took out small amounts of student debt. 

Related: 5 Myths About the New SAVE Plan, Demystified

This benefit is primarily intended for those who went to trade schools or community colleges and may have smaller debt burdens as well as lower incomes. More than 8 million borrowers have enrolled in SAVE so far, according to the department.

SAVE is facing two legal challenges brought by more than a dozen states, primarily in the south and west. The challengers allege that SAVE is illegal under federal law. The states have filed a motion for a preliminary injunction, which could freeze the program while the litigation plays out. 

If granted, it’s not entirely clear how this would affect current borrowers who have applied for or are already enrolled in SAVE. A ruling on the preliminary injunction is expected as soon as next month.

Biden administration prepares to launch new student debt relief program

While the Biden administration works to implement student loan forgiveness through several existing programs, officials are also getting ready to roll out a massive new student debt relief plan. This program is intended as a replacement for the one that the Supreme Court struck down last summer.

Who benefits from Biden’s new student loan forgiveness program?

At least 25 million borrowers could ultimately receive relief under the new plan, many of them automatically. The program targets relief to five categories of borrowers: 

  • Borrowers with significant accrued or capitalized interest 
  • Borrowers who first entered repayment at least 20 or 25 years ago
  • Former students of institutions that lost their eligibility to participate in federal financial aid programs due to poor student outcomes
  • Borrowers who qualify for existing student loan forgiveness programs but haven’t applied
  • Borrowers experiencing significant personal and financial hardships

When will the new student loan forgiveness be released?

The Education Department released draft regulations last month and closed out a public comment period earlier in May 2024. The department should release a final version of the regulations later this summer, and the program could debut by the fall. However, the program is nearly certain to face legal challenges, leaving its fate uncertain. 

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This news about targeted student loan forgiveness and new programs like SAVE can be confusing to navigate on your own. That's why we're here to help. Book a personalized student loan consultation with one of our expert advisors today. We'll review your unique situation, explain the latest forgiveness programs you may qualify for and help you create a plan to manage your debt and achieve your financial goals.

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