EDUCATION
How to know if you are one of the 804,000 students whose loan will be forgiven this week
While plans fell through for a nation-wide amnesty of student debt, a recounting of federal loans means nearly a million people will have the rest of theirs struck off.
The announcement in July that billions of dollars of student debt was to be forgiven is being resolved this week.
More than 804,000 people with debt that their federal student loans will be automatically discharged, relating to accounting errors in relation to Income Driven Repayment (IDR) plans. The funds available to these borrowers amount to $39 billion.
According to the department’s website, this debt relief is a result of the government’s fixes to ensure that “all borrowers have an accurate count of the number of monthly payments that qualify toward forgiveness under IDR plans.”
The $39 billion may sound a lot but is a drop in the fast-rising swamp of student debt which is approaching $2 trillion.
Why is this debt forgiveness possible?
The forgiveness is a result of a payment count adjustment, announced in April last year. Errors made either tracking payments or advising properly on the payment process by companies tasked with helping guide borrowers has led to millions falling further behind on settling the debts they took out to get a higher education.
A review from the Education Department “revealed significant flaws” in the system that suggested borrowers were “missing out on progress toward IDR forgiveness.”
Borrowers involved in the IDR plans who made the necessary 240 or 300 monthly payments, the equivalent to 20 or 25 years of qualifying months, are eligible for forgiveness. This was tallied wrong, meaning these hundreds of thousands of borrowers should have had their debt reduced long ago.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Secretary of Education Miguel Cardona said in a statement at the time the forgiveness was announced.
How to claim the debt forgiveness
You should receive an email from your student loans company, which began alerting people about the debt forgiveness on Monday, according to ABC News.
Nothing else needs to be done.