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Education Department’s Efforts to Forgive Student Loans A Chance

The Biden administration’s ambitious plans for student loan forgiveness may have faced setbacks, but the Education Department is actively working to provide relief to eligible borrowers.

Reviewing Repayment Histories

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In a renewed effort, the department is reviewing the repayment histories of long-time borrowers who should have had their student loan balances forgiven. This includes lower-income borrowers and those in public sector jobs.

Reviewing Long-Term Borrowers’ Repayment History

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For months, the Education Department has been examining the payment records of borrowers. They have spotting those who have been diligently making payments for decades.

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Many Adjusted Their Monthly Payments By Earnings

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Many of these borrowers were enrolled in repayment plans that adjusted their monthly payments based on their earnings. Additionally, individuals working in public sector roles are part of this review.

Challenges in Tracking Repayment Progress

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A federal watchdog raised concerns last year about the accuracy of tracking payments made by borrowers in income-driven repayment plans. This discrepancy has disadvantaged borrowers who should have been on the path to having their loan balances forgiven.

$44 Billion in Balances Erased

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As a result of the ongoing review, more than 900,000 borrowers with Direct or Federal Family Education Loans (FFEL) have seen a total of $44 billion in student loan balances wiped out. Richard Cordray, the chief operating officer of the Federal Student Aid Office, confirmed this significant relief.

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Continuing the Search for Eligible Borrowers

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The Education Department is committed to identifying additional borrowers eligible for loan forgiveness. The agency aims to complete the review process by July, ensuring that those who have overpaid on their loans receive refunds.

Consolidation Deadline Extended

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Borrowers with loans not held by the Education Department, such as commercially held Federal Family Education Loans (FFEL), school-held Perkins loans, or Health Education Assistance Loans (HEAL), must consolidate their loans into a new Direct Consolidation Loan by April 30, 2024. This step is crucial to being considered for the review of payments and potential account adjustments.

Identifying Your Loan Type

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To determine your loan type, visit the StudentAid.gov website and access your dashboard. In the “Loan Breakdown” section, you can view a list of your loans.

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Loan Types

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Direct Loans begin with “Direct,” while Federal Family Education Loan Program loans start with “FFEL.” Perkins Loans include the word “Perkins” in their name. If your loan servicer’s name begins with “Dept. of Ed” or “Default Management Collection System,” your FFEL or Perkins loan is already held by the Education Department.

Benefits for Parent PLUS Loan Borrowers

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Even borrowers with Parent PLUS loans can benefit if they have been in repayment for at least 25 years. They must also consolidate their loans by the end of April to potentially qualify for loan forgiveness.

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