Education Dept. to Resume Student Loan Forgiveness for Some

The Education Department last week quietly restarted student loan forgiveness for some borrowers on an income-based repayment (IBR) plan, The Washington Post reported Saturday.

The process had been on hold since July due to legal challenges.

IBR borrowers who have made on-time payments for 25 years received emails from the department saying their balances would be forgiven, unless they opt out by Oct. 21. Otherwise, most discharges will be processed within two weeks of that date, the letter said.

Student loan servicers confirmed to the Post that the department had told them about the impending cancellations.

Of course, the government shutdown may delay processing of those loans; nearly 90 percent of the Education Department has been furloughed. And eligible borrowers are in a hurry: While the 2021 American Rescue Plan says that canceled student loans cannot be taxed, that provision is set to expire Dec. 31, meaning if things don’t move quickly, some students could be on the hook for paying taxes.

According to the Post, about two million people are enrolled in the IBR plan, though not all of them have paid enough yet to earn forgiveness.