The U.S. Department of Education will begin automatically discharging $39 billion in federal student loans–helping more than 804,000 borrowers get out from under crushing student debt, the department announced today.
Consumer advocates said more must be done to assist borrowers who’ve fallen behind and defaulted on repayment.
“Soon, nearly a million people who have been paying their federal student loans for over two decades will finally be able to move on with their lives without the burden of student debt,” said Abby Shafroth, co-director of advocacy at the National Consumer Law Center and director of its Student Loan Borrower Assistance Project.
“This action is the result of long-overdue fixes to structural failures in the student loan system that prevented borrowers from actually getting the relief promised by law,” Shafroth said.
Borrowers will be eligible for the relief if they have accumulated the equivalent of 20 or 25 years of qualifying months of student loan payments under income-driven repayment (IDR) plans.
No action needed by borrowers
Eligible borrowers will be informed by the Department starting today that they qualify for forgiveness without further action on their part and discharges are set to begin 30 days after notification.
“We applaud Secretary Cardona and the Biden Administration for helping right this wrong, and the many borrowers who spoke up and shared their stories, but the work must continue. Roughly 3 million more borrowers who have been in debt for the same amount of time, many of whom have fallen into default, are still waiting for their promised relief,” Shafroth added.
“Many borrowers that wound up in default are very low income and have encountered servicing errors and system failures. We will continue to work with the Administration to ensure these borrowers are not left behind.”
- NCLC’s Student Loan Borrower Assistance website