Student Loan Forgiveness: Who qualifies and how can you apply for Biden’s new plan?
President Joe Biden’s administration has announced that they will forgive $39 billion in student loan debt for 804,000 borrowers who have been paying their debts for 20 years or more and should qualify for relief.
Through a statement issued on behalf of Chief Executive and Vice President Kamala Harris, she said that throughout her career it has been a priority to reduce student loan debt and combat abusive practices where students were not given adequate credit for their payments.
“As California Attorney General, I won billions of dollars for veterans and defrauded students by standing up to predatory for-profit colleges,” she says.
She also notes that both she and the governor are committed to providing relief to student loan debt borrowers to “help them move forward with their lives, whether they want to start a family, buy a home or become entrepreneurs.”
Harris detailed that both she and Biden will continue to fight for the benefit of students and recalled that last month, President Biden announced that finding an alternative path to provide relief through the Higher Education Act, and that they finalized their new income-driven repayment plan, which will cut monthly payments in half for undergraduate loans.
“Our Administration will continue to fight to ensure that Americans can access a high-quality postsecondary education without taking on the burden of unmanageable student loan debt.” the statement adds.
Who qualifies and how can you apply for Biden’s new plan?
According to Forbes, the nearly $40 billion in student loan forgiveness is provided through IDR Account Adjustment.
IDR programs offer affordable payments to borrowers based on their income, with the possibility of student loan forgiveness after 20 to 25 years in the program.
The Biden administration sees IDR account adjustment as a unique solution to these problems, as the Department of Education can credit borrowers with time for IDR loan forgiveness that otherwise would not have counted, even for borrowers who are not currently enrolled in an IDR plan, explains Forbes.
The media outlet details that the 800,000 borrowers who were approved for student loan forgiveness this week represent the first wave of borrowers who will benefit from the IDR account adjustment.
It should be recalled that the Department of Education had previously reported that it would first prioritize borrowers who had reached their 20- or 25-year loan forgiveness milestone prior to August as a result of the retroactive credit.
“Borrowers who will receive notifications in the coming days include those with Direct Loans or Federal Family Education Loans held by the Department (including Parent PLUS loans of any type) who have reached the required forgiveness threshold as a result of receiving credit for IDR forgiveness,” reads the Department of Education’s announcement.
Eligible borrowers will soon receive an email.
Forbes adds that additional borrowers may receive student loan forgiveness in the coming months as they also cross the 20- or 25-year threshold for loan forgiveness.
While other borrowers who receive IDR credit under the initiative, but do not meet the threshold for loan forgiveness, at some point in 2024 they should begin receiving notification of their status.
Borrowers who have Department of Education federal student loans, including all Direct loans, as well as some government Family Federal Education Loan (FFEL) program loans, do not need to apply, as the IDR account adjustment is automatically given.
For those who do not reach the milestone of immediate student loan forgiveness must continue to repay their loans under an IDR plan to make continued progress.
And for borrowers who have commercial FFEL and other non-direct loans they may need to consolidate those loans through the federal Direct Consolidation program before the end of 2023 to benefit from the initiative, Forbes notes.