The U.S. Department of Education has resumed student loan forgiveness for some borrowers under a repayment program that has been suspended since July.
Borrowers who have been in repayment for decades and are eligible for debt cancellation under the Income-Based Repayment plan (IBR) are receiving notices that they qualify for the relief, companies that collect payments on the government’s behalf, told the Washington Post. The cancellations began last week.
Roughly 2 million people are enrolled in the IBR plan. However, not all borrowers have made enough payments to qualify for forgiveness.
Those who do qualify have started to receive emails from the department stating, “You’re eligible to have your student loan(s) discharged,” and that the department is working with the borrower’s service to process the relief “over the next several months.”
The department also said it will send the borrower’s discharge information to the servicer after Oct. 21, Business Insider reported.
Borrowers who wish to opt out have until Oct. 21 to contact their loan servicer and say they’re uninterested in the relief.
The Department of Education told Business Insider that a reason why some borrowers may opt out is to avoid incurring a state tax liability, but added that those who do opt out are required to continue making payments on their loans.
This news comes at a critical time for borrowers. A 2021 provision in the American Rescue Plan, which allowed forgiveness to be tax-free, is expiring Dec. 31. This means that many borrowers whose loans are not forgiven could receive a large tax bill at the beginning of 2026.
This tax does not apply to borrowers eligible for the Public Service Loan Forgiveness (PSLF) program, which offers debt cancellation to those who’ve spent a decade working for specific nonprofits or the government, CNBC wrote.
As of Aug. 31, there’s a 74,510-person backlog of borrowers waiting for their PSLF decision, according to a Department of Education court filing.
The Department of Education has not responded to MassLive’s request for comment.