804,000 long-term borrowers are having their student loans forgiven before payments resume this fall
Student loan payments start up again for most borrowers in October, but more than 800,000 people who have been paying for years are having their loans forgiven
NEW YORK — Karin Engstrom thought she’d be paying off her federal student loans for the rest of her life. The 82-year-old was shocked when she logged on to check her balance ahead of payments resuming in October and found that more than $175,000 in debt had been erased.
She's one of 804,000 borrowers who will have a total of $39 billion forgiven under a one-time adjustment granted by the Biden administration. It's for people in income-driven repayment plans who have been paying back loans for 20 or 25 years but who never received credit for late or partial payments. It also credits borrowers for periods before the pandemic when they were allowed to pause or reduce payments due to financial hardships.
To correct mistakes by loan servicers, the Department of Education is retroactively adjusting accounts, resulting in forgiveness. The department says 95% of those who qualify have now been informed of the cancellation.
Engstrom didn't immediately believe it when she saw her balances had been erased, but she eventually found a letter from the Federal Student Aid office dated August 28 that confirmed the cancellation was real.
“Info: Your student loans have been forgiven,” the letter read. “Congratulations! The Biden-Harris Administration has forgiven your federal student loan(s) listed below with Edfinancial Services in full.”
The letter listed two original federal loan amounts of $30,067.45 and $45,729.97 — now gone, along with accumulated interest that more than doubled her total.
Like many borrowers who now qualify for cancellation, she had paid on them for decades,
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