More Good News for Federal Student Loan Borrowers!
On April 19, the Department of Education announced new measures that will greatly expand the number of federal student loan borrowers eligible for loan forgiveness. Unlike last year’s announcement that expanded the Public Service Loan Forgiveness program, this month’s changes include non-public service borrowers. 40,000 borrowers are expected to receive immediate forgiveness of their loan balances.
Under an income-driven repayment (IDR) plan, remaining loan balances are forgiven after 20 or 25 years of payment, depending on the type of loan. Under PSLF, forgiveness occurs after 120 on time payments. Federal Student Aid (FSA) will conduct a one-time account adjustment that will consider periods of time when a loan was in forbearance for more than 12 consecutive months, or more than 36 months cumulatively, as counting toward forgiveness under IDR and PSLF plans. This change will be automatically reflected on the borrower’s account; there is no action by the borrower required. As stated by FSA “Any borrower with loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if you are not currently on an IDR plan.”
There is much more to this announcement, including changes in how IDR payments will be tracked going forward that should bring greater transparency and accuracy to the loan forgiveness process. If you have federal student loans in repayment, make sure to read all of the details in full to see how you may be affected.