Student loan forgiveness offered to some under Income-Based Repayment plan
The Department of Education sent out student loan forgiveness emails to eligible borrowers under the Income-Based Repayment plan last week, multiple media outlets reported. In July, the Education Department announced it paused discharges done with the IBR, which allows forgiveness after people have made repayments for 20 or 25 years.
“You are now eligible to have some or all of your federal student loan(s) discharged because you have reached the necessary number of payments under your Income-Based Repayment (IBR) Plan,” the emails said, according to Forbes. “The U.S. Department of Education (ED) will work with your loan servicer to process your IBR discharge over the next several months.”
On Reddit, borrowers reacted to this message with excitement, with some calling it the “Golden Email.”
“”I can’t believe this is happening — I’m literally sitting here in tears right now! My current loan balance is over $200,000 and it was gonna take 40 years for me to pay this off and I’m already in my early 50’s! I have been on IBR since May with a payment count of 322,” one user said.
According to Forbes, the IBR is the only repayment plan that got this forgiveness because of legal challenges facing three other plans on income.
The Education Department did not respond to The Washington Post’s requests for comment, though several student loan servicers confirmed to the news outlet that the agency let them know about the pending cancellations.
Loan forgiveness process
The Department of Education gave borrowers until Oct. 21 to opt out if they don’t want loan forgiveness by telling them to contact their loan servicer.
“One reason to consider opting out of IBR discharge is to avoid potential state tax liability. However, if you decide to opt out, please be aware that you’ll be required to continue paying your loan(s),” the department noted.
If people decide they want forgiveness, the department tells the borrower’s loan servicer to process the discharge.
“Most borrowers will have their discharge processed within two weeks, but for some borrowers, processing could take more time,” the Department of Education said.
The current government shutdown could also affect how quickly borrowers see relief.
What led up to the emails?
A provision in the 2021 American Rescue Plan, prevents student loans from being taxed — although that is going to expire on Dec. 31. Because of this deadline, and a months-long suspension of loan forgiveness, the American Federation of Teachers asked a federal judge in September to end what it said was an “unwarranted and unlawful” delay, the Washington Post wrote.
The AFT asked the court to make the department process around 75,000 outstanding requests from those in public service careers wanting to take back time they spent in forbearance because of continuing litigation against the Biden-era Saving on a Valuable Education or SAVE program. The Department of Education stopped discharging debts under the ICR, Pay as you Earn and SAVE program because an appeals court expanded the temporary suspension of the SAVE program in February.
“We stood up to them in court and demanded that they follow the law,” said Randi Weingarten, president of the American Federation of Teachers said, according to the Washington Post. “Right away, the U.S. Department of Education changed its tune — the clearest sign yet that borrowers’ rights can win out over this lawless and reckless ideological scheme.”
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Ella Rae Greene, Editor In Chief
