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Student loan forgiveness is on the way for more than 800,000 borrowers

Borrowers of more than 804,000 federal student loans are in for a treat.

These borrowers are set to receive an email from the U.S. Department of Education informing them that their loans will soon be automatically forgiven, despite the Supreme Court's defeat of President Biden's efforts at mass debt forgiveness.

The loan forgiveness is a result of a pledge made by the Biden administration last year in response to years of complaints, lawsuits, and an NPR investigation that revealed that many long-term borrowers who should have qualified for loan forgiveness under the terms of the government's income-driven repayment plans (IDR) hadn't received it due to poor management by the department and loan servicers.

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Exclusive: How low-income borrowers were let down by the most affordable student loan program
The announcement of the forgiveness was made by Miguel Cardona, the U.S. Secretary of Education, on Friday. "For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness," Cardona stated.

Federal student loan debt will be discharged to the tune of $39 billion.

For years, borrowers, supporters, and journalists have issued warnings about these IDR failures.

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Under this program, you can still be qualified for student loan forgiveness.
EDUCATION
Under this program, you can still be qualified for student loan forgiveness.
A March 2021 analysis by borrower activists stated that, at the time, 4.4 million borrowers had been repaying their loans for at least 20 years, but only 32 have had debts canceled under IDR, despite the fact that IDR guidelines had long promised a borrower's loan total will be erased after 20 years of payments.

Why? One major issue: It was challenging to enroll in these IDR programs, which were intended to be a safety net for low-income borrowers. Therefore, loan servicing agencies frequently place financially troubled customers into long-term forbearance as an alternative; this process was simpler for the companies' call center staff to handle over the phone. Although forbearance may grant a temporary relief from payments, interest still accrues.

In April 2022, an NPR investigation based on withheld Education Department records uncovered additional issues with the department's management of these IDR plans, including the fact that several loan servicing companies weren't actually tracking borrowers' progress toward forgiveness (which the department knew) and that it was common practice for borrowers to switch servicers, which frequently resulted in payment histories being damaged or missing entirely.

Senators want an investigation into the student loan program after substantial issues were found by NPR.
EDUCATION
Senators want an investigation into the student loan program after substantial issues were found by NPR.
As a reaction, the Biden administration promised to carry out a one-time "account adjustment" for borrowers of federal student loans in the spring of last year, allowing them to get retroactive credit for loan forgiveness for months spent in long-term forbearance. Even borrowers who never participated in an IDR plan are now receiving or soon will be receiving retroactive credit toward forgiveness, "regardless of whether payments were partial or late, the type of loan, or the repayment plan," according to the department's release.

Following years of complaints, an NPR exposé, and assistance for student loan borrowers
EDUCATION Following years of complaints and an NPR story, student loan borrowers will now receive assistance.
This thorough examination of borrower accounts is still ongoing and will go until 2024.

The Biden administration's prior debt relief initiatives have now totaled at least $116 billion, and Friday's $39 billion adds significantly to that amount. It also demonstrates how the Education Department may still provide targeted relief to poor borrowers in spite of the Supreme Court's recent censure.

Author

Daniel Jack

For Daniel, journalism is a way of life. He lives and breathes art and anything even remotely related to it. Politics, Cinema, books, music, fashion are a part of his lifestyle.

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