The Biden Administration Automatically Discharges $39 Billion in Federal Student Loans – Do You Qualify?

Who is eligible for automatic student loan forgiveness because of fixes to income-driven repayment plans?

Following the Supreme Court ruling that struck down the Biden Administration’s Student Loan Forgiveness Plan, President Biden and the U.S. Department of Education (Department) announced they were automatically canceling $39 billion in student loans for more than 800,000 borrowers.

The announcement is causing increased speculation regarding who qualifies and how the process will work. For any borrowers wondering about eligibility for student loan forgiveness under the new plan, the following conditions apply:

• It applies to borrowers on an income-driven payment plan or borrowers on an income-driven payment plan in the past. It also applies to people in the public service loan forgiveness program or people with direct or federal family education loans held by the Department.

• According to the Department, borrowers are already eligible for some forgiveness through a program that already exists after they’ve made at least 240 or 300 monthly payments.

• It depends on what specific repayment plan they’re on/the type of loan they took out. Previously, months when payments were late, partial or deferred didn’t count toward the 240 or 300 monthly payments; however, the announcement changes the 240 or 300 payment requirement, and monthly payments that didn’t count toward the forgiveness will now count.

• Eligibility is then determined by adding the number of months they have paid late, made a partial payment, or the number of months they paused repayment (but only if they’ve spent 12 or more consecutive months or 36 or more cumulative months pausing payments) and the number of months they have deferred payment(but only economic hardship or military deferments count after January 1, 2013, while in-school deferments don’t count if they happened before 2013).

If you have any questions regarding the new student loan forgiveness programs, please contact a member of the Schneider Downs Higher Education Industry Group at [email protected].

Related Resources

• Biden-Harris Administration to Provide 804,000 Borrowers with $39 Billion in Automatic Loan Forgiveness as a Result of Fixes to Income Driven Repayment Plans

About Schneider Downs Higher Education Services

The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients. 

To learn more, visit our Higher Education Industry Group page.