By admin Yes, the Biden administration has announced a program to address past errors made by loan servicers, resulting in $39 billion in student debt cancellation for over 800,000 borrowers. To be eligible for debt cancellation, borrowers must have direct loans or loans through the Federal Family Education Loan (F.F.E.L.) program held by the Education Department, including Parent PLUS loans. However, borrowers are only eligible if they have accumulated the equivalent of 20 or 25 years of qualifying months, which translates to 240 or 300 months of repayment in an income-driven repayment plan or standard repayment plan.
Borrowers will receive an updated payment count that includes all months they were in repayment, regardless of the loan type, repayment plan, or whether payments were partial or late. They will also receive credit for periods of 12 or more consecutive months in forbearance or 36 or more cumulative months in forbearance. Additionally, months in deferment before 2013 and months in economic hardship or military deferment on or after January 1, 2013, will count towards the qualifying payments.
The debt cancellation process has already begun, and borrowers will be informed by the Education Department if they have enough qualifying payments for cancellation. Debt discharges will start 30 days after notification, and borrowers’ loan servicers will provide updates on the completion. Payments will be paused until the debt is eliminated, and borrowers can opt out if they choose to do so.
The updated payment count will not be immediately available, and borrowers will have to wait until next year for the loan servicers to update those numbers. The Education Department will process all eligible borrowers for debt cancellation before updating other borrowers’ payment counts. The months counted can also be applied towards Public Service Loan Forgiveness if the borrower worked for a qualifying employer during the same period.
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