The White House released data today showing the number of student borrowers in each state who were eligible for automatic loan relief under the one-time payment adjustment for income-driven repayment (IDR) plans.
Last Friday, the Education Department notified 804,000 borrowers that they will have their student loans debt discharged, resulting in the elimination of $39 billion of such loans.
The one-time payment adjustment, announced last year, counts certain months that were previously ineligible toward student loan forgiveness under income-driven repayment plans.
Around 3.6 million borrowers will receive at least three years of credit toward loan discharge as a result of the adjustment, according to Federal Student Aid (FSA).
The one-time payment adjustment helps to reverse some of the damage caused by loan servicers that did not properly track deferments or steered borrowers to forbearance instead of income-driven repayment plans that would have counted toward years of payment.
Borrowers that have been in repayment for 20-25 years, will start to see their debt discharged and receive notices in the upcoming weeks, according to a the Education Department.
All other federal loan borrowers will see the adjustment applied in 2024.
“Our goal is to provide debt relief to borrowers…recogniz[ing] that far too many student loan borrowers are left with unaffordable, unreasonable, and unacceptable debts,” James Kvaal, under secretary at the Education Department, said in a statement.
Borrowers with commercially-held FFEL, Perkins, or Health Education Assistance Loan (HEAL) need to consolidate with Direct Consolidation Loan by December 31, 2023, to become eligible for the adjustment.
Default borrowers have until December 31, 2023, to use the Fresh Start Program to become in good standing and take advantage of the one-time payment adjustment.
Learn more here about the one-time payment adjustment.
Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda
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