Thousands of Student Loan Borrowers to Receive Loan Discharges under Income-Based Repayment Plan

The Education Department has resumed loan forgiveness for thousands of federal student loan borrowers enrolled in the Income-Based Repayment (IBR) program. Borrowers who have made payments for at least 20 years under the program will have their remaining balances erased. The loan discharges were temporarily halted earlier this year, but the Department has now resumed processing payments. Borrowers who have reached the payment threshold can expect to receive a notice with more information about when the loan discharge will be processed, and most remaining balances are expected to disappear within two weeks.

Key Takeaways:

• The Education Department has resumed loan forgiveness for borrowers enrolled in the Income-Based Repayment (IBR) program, who have made payments for 20 to 25 years.
• Borrowers who have reached the payment threshold do not need to take any action, but will receive a notice with more information about when the loan discharge will be processed.
• Most remaining balances are expected to disappear within two weeks, although processing time may vary.
• Borrowers can opt out of the loan discharge before October 21, but it is unlikely they will.
• The IBR program, which first became available in July 2009, has more than 2 million borrowers enrolled, but not all will have reached the payment threshold.
• Enrolled borrowers with loans made after July 1, 2014, must make 240 payments, while those with loans taken before that must make 300 payments.
• Borrowers in other income-driven plans, such as SAVE, PAYE, and I.C.R., are still blocked from cancellation due to Republican-led legal challenges.
• The Education Department has not yet implemented the legal change that makes all borrowers eligible for IBR, which may affect some borrowers who try to switch plans.
• Borrowers who are still receiving monthly bills but believe they have made enough payments to receive a loan discharge should continue making payments and wait for the notice, as the Education Department has said it will reimburse those who overpaid.

Statistics:

• More than 2 million borrowers are enrolled in the IBR program.
• Borrowers with loans made after July 1, 2014, must make 240 payments, while those with loans taken before that must make 300 payments.
• Most remaining balances are expected to disappear within two weeks.

Sources:

• "Student Borrower Protection Center"
• "The New York Times"
• "Federal Student Aid office"
• "Student Loan Servicing Alliance"
• "National Consumer Law Center"