The Biden administration has announced student loan waivers and income based repayment programmes, which are expected to benefit over 3.6 million borrowers. The Department of Education has also revealed that at least 40,000 borrowers will receive immediate student loan forgiveness with the newly-announced plan.
The new reforms for public service loan forgiveness (PSLF) and income-driven repayment (IDR) plans were announced on Tuesday and it will wipe away the debt of tens of thousands of borrowers and help millions more get closer to forgiveness.
The Education Department also revealed that nearly 3.6 million borrowers in IDR plans will be closer to forgiveness, having at least three years of additional credits added to their overall payment tally.
Income Driven Repayment Plans
The Department also maintained that the student loans were never meant to be a life sentence, but it's certainly felt that way for borrowers locked out of debt relief they're eligible for. The department also believed that it will begin begin to remedy years of administrative failures that effectively denied the promise of loan forgiveness to certain borrowers enrolled in IDR plans.
Some 3.6 million student loan borrowers will be given three years of credit toward eventual debt forgiveness, through a revision of payment counting for the Department of Education's income-based repayment program, which it says will address "data problems and past implementation inaccuracies," according to Forbes.
IDR plans offer substantially lower monthly payments for most borrowers. Borrowers on most plans are entitled to forgiveness after 20 years of payments and depend on FSA and its servicers to accurately track their progress toward relief. However, the Department's review of IDR payment-tracking procedures has revealed significant flaws that suggest borrowers are missing out on progress toward IDR forgiveness.
Public Service Loan Forgiveness
Under Public Service Loan Forgiveness, nearly 40,000 people will be benefitted. Borrowers who work for a government agency or nonprofit for 10 years qualify for this programme.
According to the Federal Reserve, $1.7 trillion. That's how much student loan borrowers—40 million Americans, or roughly 12% of the country—collectively owe in the U.S. as of April 7.
