Over 10K Iowans to have federal student loan debt forgiven

More than 10,000 Iowans will have their remaining federal student loan debt wiped out under fixes to the U.S. Department of Education’s income-driven repayment plans.

According to data released this week by the department, 10,730 borrowers in Iowa are eligible to have their loans automatically discharged in the weeks ahead, totaling $465 million statewide. This forgiveness requires no action by borrowers, who will be notified when their debt has been discharged.

These discharges apply to those who have accumulated either 20 or 25 years worth of qualifying months, depending on the type of income-driven repayment plan. The Department of Education will notify borrowers who reach forgiveness thresholds every two months until 2024, when borrowers still ineligible for forgiveness will receive updated payment counts.

The department announced in 2022 it would address failures in its student loan programs after details emerged about mishandling of income-driven repayment plans by the department and just how few people’s debts were canceled after 20 or 25 years, as they were supposed to have been under these plans.

A 2021 National Consumer Law Center report detailed how just 32 individuals out of more than 4 million borrowers had their debt canceled after 20 years. A 2022 NPR investigation found that loan servicers failed to accurately track payment histories and borrowers’ progress toward loan cancellation.

“By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans,” said U.S. Secretary of Education Miguel Cardona in a statement. “This Administration will not stop fighting to level the playing field in higher education.”

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The Department of Education this month began notifying borrowers of the discharge — 803,990 people with $39 billion in total debt relief. Texas comes out on top as the state with the most eligible borrowers and highest amount of money being forgiven, with more than 63,000 residents and just over $3 billion in loans.

Under the Biden administration, the Department of Education has forgiven more than $116 million in student loan debt for more than 3.4 million people.

This article first appeared in the Iowa Capital Dispatch.