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A recent court filing revealed that the Trump administration identified more than 40,000 borrowers eligible for federal student loan forgiveness in January.
More than 10,800 borrowers eligible for debt forgiveness were enrolled in the U.S. Department of Education’s income-based repayment plans. More than 10,700 people were also enrolled in income-contingent repayment plans. and 820 borrowers enrolled in the Pay as You Earn Repayment Plan.
All three of these programs are known as income-driven repayment plans. IDR limits a borrower’s monthly bills to a portion of their discretionary income and erases the remaining debt after a set period of time (usually 20 or 25 years).
An additional 18,160 federal student loan borrowers had their debt canceled in January through the Public Service Loan Forgiveness Program, the Education Department said in a recent court filing. Signed into law by President George W. Bush in 2007, PSLF offers debt forgiveness to people who have worked for certain nonprofit organizations or the federal government for 10 years.
January’s numbers suggest the Trump administration is ramping up efforts to ease the economic burden of student loan debt.
Amid a flurry of recent changes to the federal lending system and significant staff cuts at the Department of Education in March, many student loan holders are struggling to access loan forgiveness opportunities available to them based on their loan terms.
According to the Congressional Research Service, more than 42 million Americans have student loans, totaling more than $1.6 trillion in debt.
Education Department officials agreed to share updates on the student loan forgiveness process as part of an October settlement with the American Federation of Teachers, a teachers union representing about 1.8 million members. AFT sued the Trump administration last year, accusing the agency of denying student loan borrowers legal rights.
“Thanks to our litigation, 20,000 more teachers, nurses, firefighters, and public servants finally had their debts forgiven,” said AFT President Randi Weingarten.
“Golden Mail” regarding student loan forgiveness
Borrowers who were deemed eligible for IDR forgiveness in January have not yet had their debts forgiven, Education Department officials said in a court filing. The department typically gives borrowers a short period to opt out of debt cancellation.
“These people should receive a notice in February,” said Nancy Nearman, assistant director of New York’s Education Debt Consumer Assistance Program.
“We actually have several customers who received ‘golden mail’ this month,” Nearman said, referring to the term some borrowers use to describe the Department of Education’s electronic messages confirming debt forgiveness.
Affordable repayment plans remain outstanding
The Department of Education reports that more than 626,000 federal student loan holders are stuck applying for affordable repayment plans. Consumer advocacy groups say many borrowers rely on IDR plans to cover their monthly payments.
However, the Department of Education has made progress in processing applications, with about 734,000 applications pending in December, compared to about 1.4 million in July.
But the PSLF buyback pile continues to grow, with more than 86,520 borrowers waiting in the wings in January, up from 83,370 in December and 80,210 in November.
The buyback option allows borrowers seeking PSLF to make retroactive payments for months missed due to forbearance or forbearance, accelerating the timeline for forgiveness.
The Ministry of Education announced in January that it had approved 1,980 buyback applications.
