Understanding Biden’s New Student Loan Forgiveness Plan: President Joe Biden’s administration has announced it will forgive $39 billion in student loan debt for 804,000 borrowers who have made payments for at least 20 years and should be eligible for relief.
Understanding Biden’s New Student Loan Forgiveness Plan
In a statement released on behalf of Chief Executive and Vice President Kamala Harris, she explains that reducing student loan debt and combating abusive practises that did not provide students with appropriate credit for their payments have been a priority throughout her career.
The Vice President states, “As California’s attorney general, I won a billion dollars for defrauded veterans and students by taking on predatory for-profit colleges.” She also mentions that she and the President are committed to providing relief to student loan borrowers in order to “help them move forward with their lives, whether they want to start a family, buy a home, or become entrepreneurs.”
Harris detailed that she and Biden will continue to fight for student benefits and recalled that President Biden announced last month the pursuit of an alternative course for Higher Education Act relief. In addition, they have finalised their new income-based repayment plan, which will reduce monthly payments for undergraduate loans by half.
The statement continues, “Our administration will continue to fight to ensure that Americans have access to a high-quality postsecondary education without the burden of unmanageable student loan debt.”
Who is Eligible and How Do I Apply for the New Biden Plan?
According to Forbes, the Income-Driven Repayment (IDR) Adjustment provides the nearly $40 billion in student loan forgiveness.
After 20 or 25 years in the programme, debtors may be eligible for loan forgiveness.
Forbes explains that the Biden administration views the IDR Adjustment as a unique solution to these issues, as the Department of Education can credit borrowers with time towards IDR loan forgiveness that otherwise would not have counted, even for borrowers who are not presently enrolled in an IDR plan.
This week’s approval of 800,000 borrowers for student loan forgiveness represents the first cohort of borrowers to benefit from the IDR Adjustment, according to the news source.
It is important to recall that the Department of Education had previously announced that it would give priority to borrowers who had attained the 20- or 25-year milestone for loan forgiveness prior to August due to retroactive credit.
“The borrowers who will receive notifications in the coming days include those with Direct Loans or Federal Family Education Loans held by the Department (including any type of PLUS loans for Parents) who have reached the necessary forgiveness threshold as a result of receiving credit towards IDR forgiveness,” reads an announcement from the Department of Education.
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Understanding Biden’s New Student Loan Forgiveness Plan: Soon, qualified borrowers will receive an email notification
Forbes adds that additional creditors may qualify for student loan forgiveness in the coming months as they reach the 20- or 25-year loan forgiveness threshold.
In the meantime, other debtors who receive IDR credit under the programme but do not meet the forgiveness threshold will begin receiving status updates in 2024.
Since the IDR Adjustment is automatic, borrowers with federal student loans from the Department of Education, including all Direct Loans and some Family Federal Education Loan (FFEL) programme loans, do not need to apply.
Those who do not attain the immediate milestone for student loan forgiveness must continue making payments under an IDR plan to advance.
Forbes indicates that debtors with commercial FFEL loans and other non-direct loans may be required to consolidate their loans through the Federal Direct Consolidation programme by the end of 2023 in order to benefit from the initiative.
