Biden Administration Implements $40 Billion Student Loan Forgiveness Program

IDR Account Adjustment:

The Biden administration has introduced a $40 billion student loan forgiveness program called the IDR Account Adjustment. This initiative aims to address issues with Income-Driven Repayment (IDR) programs that have been ongoing for years. IDR programs provide affordable payments based on borrowers’ income, with the potential for loan forgiveness after 20 or 25 years. However, administrative problems and poor oversight have hindered progress towards loan forgiveness for many borrowers.

The IDR Account Adjustment is a one-time fix to rectify these issues. It allows the Department of Education to credit borrowers with time towards IDR loan forgiveness, even for those not currently enrolled in an IDR plan. Past repayment periods, deferment, and forbearance periods can count towards loan forgiveness, benefiting borrowers seeking relief through the Public Service Loan Forgiveness (PSLF) program as well.

The first group of borrowers, totaling 800,000, has been approved for student loan forgiveness as part of the IDR Account Adjustment. The Education Department prioritized borrowers who would have reached their loan forgiveness milestone before August, ensuring they are not billed when student loan payments resume later this summer. Eligible borrowers will receive notifications via email soon.

Additional borrowers may also qualify for debt relief in the future as they reach the 20 or 25-year threshold for loan forgiveness. Borrowers who fall short of the threshold but receive IDR credit will be notified of their status in 2024. Those with Education Department-held federal student loans, including Direct Loans and some government-held Family Federal Education Loan (FFEL) program loans, automatically benefit from the IDR Account Adjustment without needing to apply. However, borrowers with commercially-held FFEL loans and other non-Direct loans may need to consolidate their loans through the federal Direct consolidation program before the end of 2023 to take advantage of the initiative.

It’s important to note that the IDR Account Adjustment is separate from President Biden’s one-time debt cancellation plan, which was recently struck down by the Supreme Court. The Biden administration is also introducing a new IDR plan that may result in accelerated loan forgiveness and lower loan payments for borrowers. Furthermore, the administration is developing a new student loan forgiveness plan to replace the one invalidated by the Supreme Court.

3 thoughts on “Biden Administration Implements $40 Billion Student Loan Forgiveness Program

  1. This is for borrowers enrolled in Income-driven Repayment plans that were promised forgiveness after making 20 or more years of payments. This is not vulnerable to the Supreme Court decision.

  2. Cant wait until this takes into effect. Borrowers are suffering today and we need relief

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