Last September 7,700 People Should Have Had Their Student Loan Forgiven: Here’s Why It Didn’t Happen
Income-driven repayment (IDR) plans on student loans extend repayment periods by basing monthly payments on income and family size. Borrowers in these types of repayment plans are also eligible for forgiveness after 20 to 25 years of qualifying payments without needing to apply, says the U.S. Government Accountability Office (GAO). The GAO has found thousands of borrowers in repayment who could be eligible for forgiveness.
Discover: 6 Household Staples That Are a Waste of Money
More: 50 Ways You’re Throwing Money Away
According to the GAO, the Department of Education approved forgiveness for 157 loans under income-driven repayment as of June 1, 2021, but has had trouble tracking borrowers’ payments. GAO found that about 7,700 loans in repayment — totaling $49 million in outstanding debt, which was 11% of loans analyzed — could be eligible for forgiveness.
Education’s repayment data did not provide enough information as to why these loans had not been forgiven as of Sept. 1, 2020.
Education officials said data limitations make it difficult to track qualifying payments, and that older loans are at greater risk for tracking errors, the GAO noted. Data also shows that by 2030, the number of loan accounts potentially eligible for IDR forgiveness could climb to about 1.5 million.
The Department of Education does not give information to borrowers about the requirements for IDR forgiveness nor does it say what counts as a qualifying payment, per the GAO. Additionally, the GAO says that Education and its loan servicers do not provide updates (specifically, to borrowers in IDR plans) on the number of qualifying payments made towards loan forgiveness, unless requested.
See: POLL: Do You Think Student Loan Debt Should Be Forgiven?
Find: How To Get Your Student Loan Forgiven if You Have a Disability
Without this knowledge, IDR borrowers may make uninformed decisions, which could potentially delay loan forgiveness.
More From GOBankingRates
- The 15 Biggest Bank Failures in US History
- Financial Insight in Your Inbox: Sign Up for GBR's Daily Newsletter
- Maximize your savings with these 3 expert tips
- Take Our Poll: How Do You File Your Taxes?
