The White House today released data showing the number of student borrowers in each state who were eligible for automatic loan relief under the Single Payment Adjustment for Income Contingent Repayment (IDR) plans. ).
Last Friday, the Department of Education notified 804,000 borrowers that they would have their student loan debt forgiven, which would eliminate $39 billion of those loans.
The one-time payment adjustment, announced last year, includes some months that were previously ineligible for student loan forgiveness under income-driven repayment plans.
About 3.6 million borrowers will receive at least three years of credit for loan release following the adjustment, according to Federal Student Aid (FSA).
The one-time payment adjustment helps reverse some of the damage done by loan servicers who failed to properly track deferrals or steer borrowers into forbearance instead of income-driven repayment plans that would have counted for years of payment.
Borrowers who have been repaying for 20 to 25 years will begin to see their debt discharged and will receive notices in the coming weeks, according to the Ministry of Education.
All other federal borrowers will see the adjustment applied in 2024.
“Our goal is to provide debt relief to borrowers…recognizing[ing] that far too many student borrowers end up with unaffordable, unreasonable and unacceptable debt,” James Kvaal, undersecretary at the Department of Education, said in a statement.
Borrowers with FFEL, Perkins, or Health Education Assistance Loan (HEAL) commercial loans must consolidate with the Direct Consolidation Loan by December 31, 2023 to become eligible for the adjustment.
Borrowers in default have until December 31, 2023 to use the Fresh Start program to become in good standing and take advantage of the one-time payment adjustment.
Learn more about the one-time payment adjustment here.
Ronda is a senior personal finance reporter for Yahoo Finance and an attorney with experience in law, insurance, education and government. Follow her on Twitter @writesronda
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