Eligibility for Biden’s $39 Billion Student Loan Forgiveness—Find Out Who Qualifies

President Joe Biden delivers a speech on NATO at the Vilnius University in Vilnius, Lithuania, on July 12, 2023. Andrew Caballero-Reynolds/AFP via Getty Images

The Biden administration recently announced a $39 billion student loan forgiveness program aimed at individuals who have taken certain federal loans and are paying them back under the Income-Driven Repayment (IDR) plan.

The loan forgiveness is only applicable on loans that were made under the IDR plan provided the borrowers have made 240 or 300 monthly payments, which is equivalent to 20 to 25 years, according to a July 14 press release by the U.S. Department of Education (DoE). An IDR plan sets the monthly repayment at an amount aimed to be affordable for the borrowers based on their income and family size.

In addition to being an IDR plan, the loan must either be a federal Direct Loan or a Federal Family Education Loan (FFEL) held by the Department of Education, including Parent PLUS loans.

To be eligible for loan forgiveness, the borrower should hit the required loan forgiveness threshold as a result of receiving credit for IDR forgiveness on any of the following five periods, per the press release.

• Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the type of loan, or the repayment plan;
• Any period in which a borrower spent 12 or more consecutive months in forbearance;
• Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance;
• Any month spent in deferment (except for in-school deferment) prior to 2013; and
• Any month spent in economic hardship or military deferments on or after January 1, 2013.

“In addition, months described above that occurred prior to a loan consolidation will also be counted toward forgiveness.”

The DoE will be notifying over 804,000 borrowers that their Federal student loans will be automatically discharged over the coming weeks.

This amounts to a total of $39 billion in loans being forgiven. When loans are discharged, it means borrowers no longer have to repay their loans.

The department said that eligible borrowers will be informed starting from the date of the press release, July 14, whether they are qualified “without further action on their part.”

Discharges will start 30 days after sending emails. Once their debts are discharged, borrowers will be notified about it by their loan servicer. Borrowers who receive forgiveness will have their loan repayments paused until the completion of the discharge process.

“The Department will continue to identify and notify borrowers who reach the applicable forgiveness thresholds (240 or 300 qualifying monthly payments, depending on their repayment plan and type of loan) every two months until next year when all borrowers who are not yet eligible for forgiveness will have their payment counts updated.

“Any month counted for this purpose can also be counted toward PSLF if the borrower documents qualifying employment for that same period,” the press release said.

Supreme Court

The Biden administration’s plan to forgive the loans of a section of IDR borrowers comes after the U.S. Supreme Court blocked a massive student loan forgiveness plan in June. Under that plan, Biden wanted to cancel up to $20,000 in dues of around 40 million borrowers, which would have resulted in a massive $800 billion commitment from the government.

Biden’s new $39 billion forgiveness plan has attracted both praise and criticism. “This is huge news!!!” said Rep. Pramila Jayapal (D-Wash.) in a July 14 post on Twitter. “We’re going to keep fighting to cancel more student debt every single day.”

Students protest the rising costs of student loans for higher education on Hollywood Boulevard in Los Angeles, Sept. 22, 2012. David McNew/Getty Images

“We will not stop fighting to #CancelStudentDebt to provide relief for millions of Americans struggling with student loan debt. Thank you to President Biden for continuing to act. I’m proud this is going to help more than 42,000 New Yorkers,” Senate Majority Leader Chuck Schumer (D-N.Y.) said in a July 15 post on Twitter.

In a July 14 post on Twitter, Tom Fitton, president of the conservative foundation Judicial Watch, called the forgiveness program a “show of contempt for Supreme Court and U.S. Constitution as Biden moves to spend $39 billion without congressional authorization.”

Sen. Marsha Blackburn (R-Tenn.) accused the Biden administration of having “no respect for our institutions” in a post on Twitter. “Joe Biden should use the $39 billion he’s planning to forgive in student loan debt to secure the border—not pay for gender studies degrees,” she said in another post.

The topic of forgiving student loans has been a contentious one due to the potentially damaging consequences it can have on college costs. Some argue that forgiving debts will end up encouraging colleges and universities to keep raising their fees.

According to an estimate by the Federal Reserve Bank of New York, college tuition fees rise by $0.60 for every dollar of subsidized student loan.

In total, the Biden-Harris government has approved over $116.6 billion in student loan forgiveness over the past years for more than 3.4 million people, said the education department.