Trump administration resumes student loan forgiveness - WaPo
The Education Department resumed student loan forgiveness this week under a long-standing repayment plan that has been suspended since July. The federal agency informed borrowers who have spent a quarter of a century repaying their loans that they are now eligible to have their remaining balances cleared if they are enrolled in the Income-Based Repayment plan, known as IBR.
While the Education Department did not respond to requests for comment, several student loan servicers — the companies that collect payments on the government’s behalf — confirmed that the department alerted them to the pending cancellations this week. About 2 million people are enrolled in the IBR plan, but not all have made enough payments to qualify for forgiveness.
IBR, created in 2007, is one of four federal plans that tie monthly payments to earnings and family size with the promise of loan forgiveness after 20 or 25 years of payments — the equivalent of 240 or 300 monthly payments.
According to emails shared with The Washington Post, the Education Department said borrowers have until Oct. 21 to opt out. After that date, the discharges will be processed for most eligible borrowers within two weeks, but it could take longer for some borrowers, the notification said.
The emails come at a critical time for borrowers. A provision in the 2021 American Rescue Plan that prevents canceled student loans from being taxed is set to expire Dec. 31. That means many borrowers whose loans are forgiven after that date could be in for a hefty tax bill. The tax changes do not apply to people in the Public Service Loan Forgiveness program, which cancels loans of government and nonprofit employees after 10 years of service and 120 monthly debt payments.
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