Earlier this month, President Joe Biden announced that $39 billion of federally funded student loan debt held by 804,000 borrowers will be canceled under a program that adjusts how payments borrowers made were counted.
On July 14, the Department of Education began notifying the 804,000 borrowers that their debt will be automatically discharged in the coming weeks.
The debts are being discharged because of fixes made to ensure that all borrowers have an accurate count of the number of monthly payments that qualify for forgiveness under income-driven repayment (IDR) plans.
The fixes will credit borrowers with time toward student loan forgiveness by counting past loan periods that were not previously allowed.
The details of the IDR plan were first announced earlier this year. Student loan servicers are waiting for the Education Department to finalize the regulation, The New York Times reported.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said.
Borrowers with federally backed Direct Loans or Federal Family Education Loans who have reached the necessary forgiveness threshold will be receiving the notice from the DOE.
According to the department, borrowers are eligible for forgiveness if they have accumulated the equivalent of either 20 or 25 years of qualifying months of payments.
These borrowers are expected to have their loans discharged before student loan payments resume later this summer, the Biden administration said.
