Education Dept Offers Debt Relief to 3.6M Borrowers in Response to Biden’s Blocked Plan

The U.S. Department of Education is set to offer eligible borrowers debt forgiveness or credit towards loan cancellation as part of a one-time adjustment this summer in response to President Biden’s blocked student loan cancellation plan by the Supreme Court. More than 3.6 million Direct Loan holders will receive at least three years worth of credits toward loan forgiveness, with many automatically having their loans cancelled due to income-driven repayments or Public Service Loan Forgiveness requirements being met after a certain number of payments have been made. The Education Department explained that in the past, some months may not have counted towards these programmes for various reasons, which has prompted them to ‘more accurately reflect borrowers’ payment counts’. Borrowers who are on an income-driven repayment plan or working toward Public Service Loan Forgiveness can expect one of three outcomes as a result: no change; receiving additional credit; and having some debt forgiven automatically. The department has also revealed that the adjustments will be completed by July 1, 2024 for all Direct Loans (including Direct Subsidized Loans, Direct Unsubsidised Loans, Direct PLUS Loans, and Direct Consolidation Loans) as well as Federal Family Education Loan Program loans managed by them. Borrowers are being advised to consolidate their direct loans or FFEL program loans before April 30, 2024 in order to get the maximum benefit from this adjustment – a process which takes at least two months and involves submitting an application for Direct Consolidation Loan. The Education Department has warned that simply applying for consolidation does not guarantee any benefits under the payment count adjustment programme.