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New Student Loan Forgiveness: Who is Eligible?

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The White House is working to address and correct past failures with federal student loans.

Millions could be closer to student loan debt cancellation.

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You could get immediate debt cancellation

The Department of Education had reviewed federal student loan programs. They found that borrowers were incorrectly directed to forbearance. They plan to help those who have been affected in the past. The Department for Education will also make changes to ensure that students who take out loans in the future do not do the same. Learn more here.

Federal Student Aid (FSA) will make a one-time adjustment. It is estimated that the adjustment will result in immediate debt cancellation for thousands of borrowers.

Those who do not qualify for immediate cancellation will likely be moved closer to forgiveness. If you think you have been affected, contact the FSA ombudsman.

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Who is eligible?

If you’ve had difficulty repaying your student loans and have been asked for short-term forbearance, you’ll likely benefit from the latest debt relief plan.

Loan servicers are required to give federal student loan borrowers “clear and accurate information. This information is very important to have when faced with late payments.

The FSA review revealed that there are payment options that have been overlooked. One of them being the reimbursement based on income program (IDR). This program allows borrowers to avoid payment defaults by adjusting their monthly payment. Monthly payments are calculated based on income and family size. Your monthly payment could be $0.

If you opted out, your overall loan balance and monthly payments have increased. This is because interest accrued during forbearance. This could lead to more delinquency or even default.

IDR is different. Enrolling in an IDR program could have allowed you to stay in good standing while progressing towards debt cancellation.

If you have been affected by this policy to direct you to forbearances from your loan officer, there is help. You can file a complaint with the FSA Ombudsman and have your account reviewed at StudentAid.gov/feedback.

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Millions of students affected

More than 3.6 million student borrowers will be at least three years closer to canceling their debt. This estimate comes from the FSA based on enrollment in the IDR program with the new stock.

The FSA has also estimated that several thousand people with older loans will see immediate cancellation via IDR. Indeed, IDR promises loan forgiveness after 20 to 25 years of payment.

The Biden administration’s action will result in debt cancellation for another 40,000 student borrowers. This immediate cancellation of the debt will take place within the framework of the Public Service Loan Relief Program (PSLF). If you’ve made 120 qualifying payments, you could have the remaining debt forgiven. Payments must have been made on a repayment plan while working for a qualified employer.

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