The 800,000 borrowers who qualify are just the first wave in what is expected to be one of Biden’s most significant student loan forgiveness initiatives.
The Biden administation has announced nearly $40 billion in student loan forgiveness this week under a one-time student debt relief program. The 800,000 borrowers who qualify are just the first wave in what is expected to be one of Biden’s most significant loan forgiveness initiatives.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” said U.S. Secretary of Education Miguel Cardona in a statement on Friday. “Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers.”
Here’s what borrowers need to know.Student Loan Forgiveness Under IDR Account Adjustment To Remedy Past Student Loan Payment Issues
The $40 billion in student loan forgiveness is being provided through the IDR Account Adjustment. The Biden administration first unveiled the one-time program last year as a massive fix designed to remedy widespread problems with Income-Driven Repayment programs, which had persisted for years.
IDR programs provide affordable payments to borrowers based on their income, with the possibility of student loan forgiveness after 2o or 25 years in the program. But administrative problems and poor oversight resulted in numerous issues that derailed or stalled borrowers’ progress toward loan forgiveness. Some borrowers were improperly steered into costly forbearances, resulting in substantial balance increases and no progress toward loan forgiveness.
The IDR Account Adjustment, according to the Biden administration, is a one-time fix for these issues. Under this temporary initiative, the Education Department can credit borrowers with time toward IDR loan forgiveness that otherwise would not have counted, even for borrowers not currently enrolled in an IDR plan.
