July 14, 2023
The President just announced a new student loan forgiveness program that will automatically forgive $39 billion of federal student loan debt for more than 800,000 of you automatically.
Don’t confuse this with any other program. This is brand new as of today, July 14th and it’s happening because the president said – government screwed up.
The Education Department says the government miscalculated the monthly payments already made by 805-thousand borrowers who have been paying off their federal student loans month by month through an income driven repayment program. The Higher Education Act of 1965 says if the borrower has paid consistently for 20 or 25 years – that’s 240 or 300 monthly payments –that debt will be forgiven. But for lots of borrowers that wasn’t happening. Borrowers have been complaining for years that their payments weren’t being counted towards that forgiveness and last year, the President announced his administration was going to look into it.
Well today, he announced. Those borrowers were right. For hundreds of thousands of borrowers, the government miscalculated payments for a whole host of reasons including, when a borrower took out the loan, the type of loan they took out and the specific type of income driven repayment program the borrower was enrolled in. The President says those roadblocks to forgiveness were wrong so, he said he got rid of them.
So who qualifies for forgiveness now?
First – you have to have a federal student loan. That includes a direct loan or a federal family education loan including parent plus loans
Second – you must have reached the necessary forgiveness threshold of 240 or 300 months of payments.
Your payment will now count towards forgiveness … regardless if your payment was partial or late, regardless of the type of federal loan it is, and regardless of which repayment plan you’re in.
Your payment will be counted for any period in which a borrower spent 12 or more consecutive months in forbearance.
Your payment will be counted any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance.
Your payment will be counted any month the borrower spent in deferment prior to 2013.
Your payment will be counted if the borrower was in in economic hardship or military deferments on or after January 1 2013.
And all the payments you made prior to loan consolidation will also be counted towards forgiveness.
How will you know if that’s you?
Check your email! The Department of Education will be notifying you in the next few days.
Those notifications will keep rolling out every two months until next year.
Those of you who have already met all these criteria will be notified by the department of education today that your loan is now automatically forgiven and you won’t have to do anything else.
The actual discharge will begin 30 days after the email is sent.
More from the Department of Education on the program here.
