Student Loan Forgiveness: What To Do If You Did (or Didn’t) Receive Biden’s Email on Next Steps for Borrowers

Mandatory Credit: Photo by MediaPunch/Shutterstock (14016980i)President Joe Biden remarks on Bidenomics at the Philly Shipyard, PhiladelphiaPresident Joe Biden gives Bidenomics speech, Philadelphia, Pennsylvania, USA - 20 Jul 2023.
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The U.S. Supreme Court might have struck down President Joe Biden’s federal student loan forgiveness program, but it’s pretty clear Biden himself has no plans to give up on debt relief. Last week the White House announced that it would send emails to more than 804,000 borrowers letting them know of its aim to cancel $39 billion in federal student loans.

In a July 14 news release, the U.S. Department of Education said it would begin notifying borrowers that the loans will be “automatically discharged” in the coming weeks. The discharges stem from fixes implemented by the Biden administration to ensure all borrowers have an “accurate count” of the number of monthly payments that qualify toward forgiveness under income-driven repayment (IDR) plans.

“These fixes are part of the Department’s commitment to address historical failures in the administration of the Federal student loan program in which qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for,” the news release said. “Borrowers are eligible for forgiveness if they have accumulated the equivalent of either 20 or 25 years of qualifying months.”

Borrowers were notified by email starting on the day of the announcement, with discharges scheduled to begin 30 days after the emails were sent.

IDR plans are designed to provide affordable monthly payments to borrowers based on their incomes, Forbes reported. They also allow for loan forgiveness if borrowers can’t pay off their balances within 20 or 25 years. Some borrowers might get loan forgiveness even sooner through the Public Service Loan Forgiveness program, which historically has required that borrowers be on an IDR plan.

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But as Forbes noted, “multiple, overlapping issues” led to many borrowers who pursued IDR and PSLF “getting shortchanged.” Some were steered into expensive forbearances, while others weren’t credited properly with progress toward student loan forgiveness.

Under the new initiative, the Education Department will continue to identify and notify borrowers who reach the applicable forgiveness thresholds. The notifications will take place every two months and will continue through next year until the point when all borrowers who are not yet eligible for forgiveness will have their payment counts updated, the White House said. Any month counted for this purpose can also be counted toward PSLF if the borrower documents qualifying employment for that same period.

Eligible borrowers who are informed that they qualify for forgiveness do not need to take any further action. Borrowers who want to opt out of the discharge should contact their loan servicer. Otherwise, they will be notified by their servicer after their debt is discharged.

Those receiving forgiveness will have their loan payments paused until their discharge is processed. Those who opt out will return to repayment once payments resume in October following a pause that began in March 2020.

Some borrowers might need to take additional action to qualify for student loan forgiveness or otherwise benefit from the initiative, Forbes reported. Here’s what you need to know:

  • Borrowers with commercially owned Federal Family Education Loans (FFEL) and other non-government-held federal student loans must consolidate them via the federal Direct consolidation program before Dec. 31, 2023. Others, such as Parent PLUS borrowers and those with multiple loans that have “significantly different histories,” also might want to consider consolidation by that deadline. Doing so will help them maximize the benefits available under the adjustment.
  • Borrowers seeking PSLF credit under the IDR Account Adjustment must complete and submit their Employment Certification forms before Dec. 31, 2023.
  • Borrowers who expect to receive “significant” IDR or PSLF credit under the adjustment – but are still short of the threshold for immediate student loan forgiveness – should consider switching to an IDR plan before payments resume.
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