

By Jacob Pamus
July 14, 2023 (Washington D.C.) – Two weeks after the conservative majority on the U.S. Supreme Court blocked President Joe Biden’s executive order granting sweeping forgiveness of student loan debts, Biden and the Department of Education today announced a new, more tailored plan to forgive $39 billion in student debt.
Who qualifies for debt forgiveness?
1. Those paying loans for 20 years or more: The new plan would forgive debts for 804,000 people who have been paying on student loans for 20 years or longer under the Income Driven Repayment (IRD) plan. According to a statement by Vice President Kamala Harris, these borrowers should be able to qualify for debt relief, but many were instead placed into forbearance by loan servicers. Others did not get appropriate credit for monthly payments.
The IDR plan is relatively simple. The amount of student loans you pay back in a month is set up to be affordable with your income. But according to Harris, this system was unfair and made it difficult for people to reach the threshold for forgiveness. With the changes, it would become much easier for loans to be forgiven because there would be fewer loopholes that stop people from qualifying for loan forgiveness.
2. People with graduate loans or those who only have undergraduate loans and are enrolled in the Pay As You Earn plan are also eligible for forgiveness after 240 months.
3. Parent Plus Loans and those with graduate loans that are not in the Pay As You Earn Plan are eligible for forgiveness after 300 months.
The DOE claims that those who reach this milestone by August 1st, 2023 are expected to have their loans forgiven. Those who do not make that deadline will likely have to start making payments as usual, but they will be refunded for payments made beyond the required amount for forgiveness.
The DOE also claims that those who enter forbearance and have not reached the 20-25 year requirements will not be credited for that forbearance and will have to wait for forgiveness until that threshold is properly reached. U.S. Secretary of Education Miguel Cardona said “We expect opposition."
How the new plan works
First, any amount of months in a repayment status now count as time spent in the IDR plan regardless of the payments made, loan type or repayment plan. The same goes for months spent in any deferment (except in school deferment) prior to 2013. Lastly, any time in repayment (or deferment or forbearance, if applicable) on earlier loans before consolidation of those loans into a single loan is being treated as being in the IDR plan as well.
More debt relief planned
“We will not stop there,” Harris stated.”Last month, President Biden announced we are pursuing an alternative path to provide relief through the Higher Education Act, and we finalized our new income-driven repayment plan – which will cut monthly payments in half for undergraduate loans. Our Administration will continue to fight to make sure Americans can access high-quality postsecondary education without taking on the burden of unmanageable student loan debt.”
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