Biden’s Debt Relief Plan Expands with One-Time Adjustment for Eligible Borrowers

FILE – U.S. President Joe Biden speaks with Education Secretary Miguel Cardona by his side as he announces new actions to protect borrowers after the Supreme Court struck down his student loan forgiveness plan in the Roosevelt Room at the White House on June 24, 2022. Eligible borrowers who consolidate their federal loans could receive some debt relief or have credit applied towards previous loan forgiveness under a one-time adjustment being made by the U.S Department of Education this summer. The move is part of President Biden’s efforts to provide student debt relief after his proposed broad cancellation was blocked by the Supreme Court. More than 3.6 million borrowers with Direct Loans will receive at least three years worth of credit towards loan forgiveness, and many loans will be automatically discharged due to this adjustment which is currently underway until summer’s end in July 2024. The Education Department explained that the change aims “to more accurately reflect borrowers’ payment counts” as there were previously instances where certain payments or months weren’t credited towards forgiveness because they were on a plan that didn’t qualify, for example. Depending on loan repayment statuses, eligible borrowers will either receive debt relief or have credit applied to their previous loans. The Education Department expects all Direct Loans and Federal Family Education Loan (FFEL) Program loans currently managed by them to be adjusted automatically by July 1st 2024 – even including previously privately-held FFEL Perkins or FFEL Program loans that were repaid through a Direct Consolidation loan. However, those who wish to consolidate their federal student loans in order to benefit from this adjustment must submit an application by April 30th 2024 as processing takes at least two months and disbursements can take upwards of sixty days after submission.