After 20 years of repayments, 4,000 Utahns will get their promised student debt relief

The Biden Administration announced Friday that it will make good on $39 billion in student loan forgiveness that was promised to borrowers

(Kenny Holston | The New York Times) Demonstrators calling for the cancellation of student debt, in Washington, June 30, 2023. More than 800,000 borrowers will have $39 billion in federal student loan debt eliminated under a government effort to remedy years of mistakes by the loan servicers.

Nearly 4,000 long-time student loan borrowers in Utah are finally getting what they’ve been promised: loan forgiveness.

For recipients whose payments were set based on their income and ability to pay, any remaining debt is supposed to be forgiven after 20 or 25 years, depending on their loan type. But that hasn’t happened — until now.

The Biden Administration last week announced $39 billion in automatic forgiveness to 804,000 borrowers who have been making income-driven payments for two decades or more.

In Utah, that’s about $200 million in canceled student debt, according to a Wednesday news release from the U.S. Department of Education.

“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” said U.S. Secretary of Education Miguel Cardona in a July 14 news release. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve.”

The U.S. Department of Education began notifying eligible borrowers last Friday by email. Debt cancellation will begin 30 days after an email was sent unless a borrower wishes to opt out.

The intervention is long overdue. According to a 2021 report by the National Consumer Law Center, 4.4 million borrowers were eligible for forgiveness at that time, after 20 years of repayment — but only 32 had had debts canceled.

A 2022 investigation by NPR unearthed the severe mismanagement by loan servicers and the Department of Education, finding that most servicers had no idea when borrowers had become eligible for forgiveness.

The department will continue to identify and notify borrowers who reach the applicable forgiveness thresholds (240 or 300 qualifying monthly payments, depending on their repayment plan and type of loan) every two months until next year, when all borrowers who are not yet eligible for forgiveness will have their payment counts updated.

Officials cited “historical failures in the administration of the Federal student loan program” that didn’t accurately track borrowers’ payments. Millions had earned forgiveness but never received it.

“Some borrowers were steered into forbearances and other statuses instead of toward (income-driven repayment) in ways that ran counter to our policies,” a department news release said.

“Now, the Department is ensuring all borrowers have an accurate count of the number of monthly payments that qualify toward (income-driven repayment) forgiveness and is discharging the loans of borrowers who have met the requirements,” officials said in the release.

While the U.S. Supreme Court recently shot down President Biden’s plan for widespread student loan forgiveness, ruling his administration did not have the authority to forgive hundreds of billions of dollars of student debt, following through on what was previously promised is another matter.

“Republican lawmakers – who had no problem with the government forgiving millions of dollars of their own business loans – have tried everything they can to stop me from providing relief to hardworking Americans,” Biden said in a July 14 statement. “Some are even objecting to the actions we announced today, which follows through on relief borrowers were promised, but never given, even when they had been making payments for decades.”

Under Biden’s action, borrowers will be notified by their servicer after their debt is discharged. Those receiving forgiveness will have repayment on those loans paused until their discharge is processed, while those who opt out of the discharge will return to repayment once payments resume.