Biden Sends Student Loan Forgiveness Emails To 800,000 Borrowers

President Biden sent emails to over 800,000 borrowers this week, congratulating them on receiving student loan forgiveness and inviting them to share their story.

“Congratulations – your student loan has been forgiven because of actions my Administration took to make sure you receive the relief you earned and deserve,” says the email, which is titled “A Message From President Biden.”

Here’s what borrowers need to know

More Than $40 Billion In Student Loan Forgiveness Under Adjustment

The student loan forgiveness referenced in Biden’s email was provided via the IDR Account Adjustment initiative. This one-time program was implemented to address longstanding problems with income-driven repayment plans including poor record-keeping and forbearance steering. In many cases, borrowers experienced significant interest accrual and capitalization while adding many years to their repayment term as a result of poor administering and oversight of IDR programs.

The account adjustment allows the Education Department to credit borrowers with time toward their 20- or 25-year student loan forgiveness terms under IDR plans that historically would not have counted. Borrowers can receive relief even if they are not currently enrolled in IDR. Under the adjustment initiative, earlier periods of repayment under any plan, as well as many periods of deferment and forbearance, can be counted toward a borrower’s IDR loan forgiveness term.

Borrowers who receive enough IDR credit to reach the appropriate milestone for loan forgiveness are receiving discharges. So far, at least 850,000 borrowers have been approved for more than $40 billion in student loan forgiveness under the adjustment.

“For too long, the student loan program failed to live up to its commitments – and millions like you never got the relief you were owed because of errors and administrative failures,” said Biden in the email sent to borrowers. “I vowed to fix that, and I’m proud that my Administration has delivered on that promise. I hope this relief gives you a little more breathing room.” Biden goes on to encourage borrowers to share their story.

Student Loan Forgiveness Continues Under Account Adjustment

The IDR Account Adjustment is ongoing, and more relief may be coming.

The Biden administration initially focused on providing relief to borrowers working in public service jobs. The account adjustment can allow borrowers to receive Public Service Loan Forgiveness credit (in addition to IDR credit), and it operates as an extension of many of the benefits associated with the Limited PSLF Waiver, which ended last fall. More than 600,000 additional borrowers have received student loan forgiveness through PSLF, according to the Education Department. Borrowers who have submitted PSLF employment certifications “will see their PSLF payment counts update each month until we make the final adjustment to their IDR counts in 2024,” according to Education Department guidance.

Next, the department began implementing the adjustment for people who reached their 20-year and 25-year student loan forgiveness IDR milestones as a result of the credit received. The department “will continue to identify and notify borrowers who reach the necessary forgiveness threshold of 240 or 300 months’ worth of qualifying payments, depending on the repayment plan and type of loan,” says the published guidance. “We will send these notifications out every two months until next year, at which point all borrowers who are not yet eligible for forgiveness will have their payment counts updated.”

The administration is expected to complete the IDR Account Adjustment in 2024. Borrowers who receive IDR and PSLF credit, but who fall short of the thresholds for student loan forgiveness, will need to continue repaying their loans under an IDR plan (such as the new SAVE plan) to make ongoing progress toward loan forgiveness.

Conservative legal groups filed a lawsuit last summer to try to stop the IDR Account Adjustment from going into effect, arguing that the program is illegal. A Michigan federal court dismissed the lawsuit due to lack of standing in August. However, the challengers have appealed, and that appeal is still pending.

Important Student Loan Forgiveness Deadline Is Approaching

For borrowers who already have government-owned federal student loans — including all Direct loan borrowers — relief will be automatic under the IDR Account Adjustment.

However, some borrowers will need to apply to consolidate their loans via the federal Direct consolidation program before December 31, 2023 in order to qualify. “If you have commercially held FFEL or any Perkins or HEAL loans, you will need to consolidate them before the end of 2023 to benefit from the account adjustment,” says Education Department guidance.

In addition, borrowers who have federal student loans with different repayment histories can also benefit from Direct loan consolidation. Under the IDR Account Adjustment, “Assuming your repayment history overlaps for each loan, the consolidation loan will be credited with the longest amount of time in repayment of the loans that were consolidated,” says the department. These borrowers will also need to consolidate before the end of the year in order to maximize these benefits.

“If you apply for consolidation before the end of 2023, the adjustment will count periods of repayment on your loans prior to the consolidation toward IDR forgiveness and (for eligible borrowers) PSLF,” reads the official program guidance. “This differs from the earlier approach, in which consolidating your Direct Loans would reset your payment count to zero. After the IDR adjustment has been applied to all borrower accounts in 2024, accounts will be treated in accordance with the regulations in place at that time.”