Under the adjustments, or “fixes,” announced by the Biden administration, more than 20,000 Arizonans who paid off student loans for years qualified for automatic student loan relief. And some borrowers are now benefiting from the program.
“People are getting notifications, looking at their balances, and seeing that they are gone,” says 3rd, a Tucson-based group that is a certified financial planner and provides financial literacy counseling to young people. Decade’s principal mentor Jennifer Edwards said.
Some of the past monthly payments that have not been counted so far will be eligible for debt forgiveness without further action by the borrower.
Potential relief for 20,530 Arizona eligible borrowers totals $1.03 billion, or an average of nearly $50,200 per person, including interest.Arizona ranks 11thth It ranks 12th among states for eligible borrowers and 12th for total estimated debt relief.
Texas tops both categories with 63,730 borrowers and $3.09 billion in relief, just ahead of populous states California and Florida to round out the top three in both categories. According to state-by-state tallies released by the U.S. Department of Education,.
The Department of Education released these and other figures in July, and the dismissal of the lawsuit in federal court on Monday appears to have given the green light to the program. The program of forgiveness was already well underway.
“This is not a new forgiveness program,” Edwards said. “(Loan) servicers are just catching up with the policies enacted in 2022, and that is just happening now.”
Fix errors in income-driven repayment plan reporting
This amendment or correction applies to the Income-Driven Repayment Plan implemented by the Biden administration to ensure that all borrowers are given the correct monthly payment amount to qualify for forgiveness. The ministry has started notifying a total of 804,000 borrowers nationwide that their debts will be automatically forgiven in the coming weeks. The total loan amount is US$39 billion.
These are part of the total $116 billion in student loans that have been forgiven since Biden took office, helping more than 3.4 million borrowers. The $116 billion includes $45 billion in loan forgiveness for more than 650,000 civil servants.
Regarding the income-driven repayment program, the department said past eligible payments were not accurately accounted for by the department and third-party loan servicing firms.
Borrowers may qualify for loan forgiveness if they have accumulated eligible monthly payments for 20 or 25 years, depending on the type of loan and income-driven repayment plan. Last year, the administration announced adjustments to the number of payments.
The ministry said the recent amendments fixed a variety of issues, including certain months’ payments not being credited if a borrower was enrolled in a plan that was previously ineligible.
Biden said in a statement that more than 800,000 eligible borrowers have paid off their loans for more than 20 years.
Loan forgiveness is currently being processed
Those who qualify for forgiveness have received or will receive it without doing anything on their part.
U.S. Secretary of Education Miguel Cardona also said in a statement that the department will continue to identify and notify borrowers who have reached the applicable forgiveness threshold (240 or 300 monthly payments), depending on repayment plan and loan type.
The waiver has been initiated or will begin 30 days after the borrower receives the department’s email. The first email was sent to him in mid-July. You are not obligated to make any loan payments during the forgiveness process. The borrower will be notified when the debt is forgiven.
The ministry plans to update payment counts for all borrowers not yet eligible for exemptions by next year.
Borrowers with questions about eligibility should first contact the loan repayment company, Edwards said. She also suggested her TISLA, the Association of Student Loan Advisors, as a free resource.
Generally, the forgiven loan amount is subject to tax, but federal tax on these student loans will be waived through 2025.
In another matter, the Supreme Court in June blocked a proposal to provide one-time student loan relief to about 43 million people, ruling that the White House exceeded its authority to provide relief.
Please contact reporters at russ.wiles@arizonarepublic.com.
