The Department of Education won a federal court case on Monday after announcing it would begin forgiving more than 804,000 federal student loan borrowers to fix past errors.
Borrowers who have been in repayment for at least 20 years are eligible for debt forgiveness. The Education Department said it will be doing a one-time adjustment of income-driven repayment plans. The threshold is bumped to 25 years for many of those who also have graduate school student loans.
The lawsuit was thrown out as the judge in the case, Thomas Ludington, a George W. Bush appointee, said the plaintiffs were not damaged by the decision.
On July 14, the Department of Education said it could begin notifying those who will automatically have their loans forgiven within 30 days. It is expected those notifications will go out this week.
Borrowers in income-driven repayment plans have long been eligible for forgiveness after 20 years of repayments, but the changes made by the Biden administration broaden what it means to be in repayments. Older borrowers will be those most impacted by the decision. The Department of Education estimates there are 1.5 million borrowers over age 50 in income-driven repayment plans.
The Department of Education said the following will count as time spent in repayment:
- Any months in a repayment status, regardless of the payments made, loan type or repayment plan
- 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance
- Any months spent in economic hardship or military deferments in 2013 or later
- Any months spent in any deferment (with the exception of in-school deferment) prior to 2013
- Any time in repayment (or deferment or forbearance, if applicable) on earlier loans before consolidation of those loans into a single loan
The Department of Education said borrowers who reached the forgiveness milestone before Aug. 1, 2023, are expected to have their loans forgiven before student loan payments restart this fall.
The Department of Education also said that those who enter forbearance and have not reached the 20- or 25-year thresholds won't get credit for the period of forbearance and will need to make eligible payments to reach forgiveness.
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