40,000 federal student loan borrowers will receive loan forgiveness
HOUSTON - A scathing new report reveals thousands of federal student loan borrowers have been saddled with debt that should have been canceled through a loan forgiveness program, according to the Government Accountability Office (GAO).
This comes one day after the Biden Administration announced efforts to correct this, which will result in 40,000 borrowers becoming eligible for forgiveness through the Public Service Loan Forgiveness Program, and 3.6 million more will move closer toward forgiveness.
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The Government Accountability Office reports the U.S. Department of Education failed to properly record payments for thousands of borrowers in income-driven repayment plans that would have counted toward loan forgiveness after 20 or 25 years of payments.
The Education Department says it will give borrowers retroactive credit for "forbearance steering," where they say student loan servicers put borrowers into forbearance rather than income-driven repayment plans.
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The Department says it will also conduct a one-time revision of income-driven payment counts and give borrowers credit for those payments toward loan forgiveness.
"There was a government watchdog agency that said the Department of Education really just didn't do its job, so now they’re going back to fix it," said Roy Paul, Executive Director of Cents Ability. "But it is good news for people involved in a program that they thought over a period of time would rid them of student loan debt through a forgiveness program, and they just didn’t get the right guidance from the Education Department."
The GAO estimates the number of loans eligible for forgiveness is expected to reach 1.5 million loans held by 600,000 people by the year 2030.