Thanks to student loan repayment changes made by the US Department of Education on Tuesday, at least 40,000 borrowers under the Public Service Loan Forgiveness program will see immediate student loan debt forgiveness. Over 3.6 million borrowers could also receive three years of credit toward income-driven repayment forgiveness.
The Department of Education said these changes to income-driven repayment plans are meant to represent its commitment to addressing "historical failures" in how the federal student loan program was managed in the past and to support student loan borrowers through the pandemic.
Income-driven repayment plans are designed to help borrowers better afford monthly student loan payments, adjusting the payment amount owed each month based on their income and household size. Some borrowers, for example, could see monthly payments as low as zero. Borrowers on IDR plans can receive student loan forgiveness after making payments for 20 to 25 years.
The Education Department also outlined changes in federal student aid that are designed to protect borrowers in the future. These updates include changes to how student loan forbearance counts toward debt forgiveness and more oversight into how loan servicers use forbearance.
"Student loans were never meant to be a life sentence, but it's certainly felt that way for borrowers locked out of debt relief they're eligible for," US Education Secretary Miguel Cardona said in a statement. "Today, the Department of Education will begin to remedy years of administrative failures that effectively denied the promise of loan forgiveness to certain borrowers enrolled in IDR plans."
This announcement comes a few weeks after a National Public Radio report found income-driven repayment plans, which more than 9 million borrowers are enrolled in, have been mismanaged by loan servicers and the DOE.