The U.S. Department of Education says it will retroactively help millions of federal student loan borrowers who have been hurt and held back by its income-driven repayment plans, and called the plays’ longstanding flaws and mismanagement “inexcusable.”
The announcement expands access to student loan forgiveness for millions of borrowers, according to NPR.
The announcement came after years of complaints and lawsuits, as well as investigations.
Investigations found that the IDR plans, which promise affordable monthly payments as low as $0 and loan forgiveness after 20-25 years, have been mismanaged egregiously by the department and the loan servicing companies.
Now, around 3.6 million low-income borrowers will be eligible. About 40,000 will immediately qualify for debt cancellation, according to estimates by the Department of Education.
The announcement will also allow those who have been paying off loans for decades through income-driven repayment plans to receive credit, and eventually, reach loan forgiveness.
U.S. Education Secretary Miguel Cardona said in a statement that the plan will begin to remedy hears of administrative failures that ultimately denied the promise of loan forgiveness to certain borrowers.
In 2021, there was a revelation that, at that time, 4.4 million borrowers had been repaying loans for a whopping two decades at least, but only 32 had had debts canceled under IDR.
While the changes will happen automatically, the Department of Education has warned that it might take a while, because it needs to upgrade its antiquated National Student Loan Data System. Therefore, the loan cancelations will not officially begin until about the fall of this year.
The move comes amid mounting political pressures. Chairs of both the House and Senate education committees, Rep. Bobby Scott, D-Va., and Sen. Patty Murray, D-Wash., wrote a letter to the Education Secretary Miguel Cardona urging the administration to “provide immediate relief and undo past harms.” They continued that borrowers have lived with ballooning debts and false promises for too long.
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