Education Department Says 5,300 Borrowers Will Receive Student Loan Discharges

The U.S. Education Department stated that approximately 5,300 borrowers will receive discharges of their federal student loans in May. The discharges were identified during an eligibility check conducted in March under income-driven repayment plans. The department filed the update last Wednesday in a court-ordered status report submitted to federal district court.

The department reported that data validation delays prevented final lists from reaching loan servicers until mid-April. As a result, no discharges from the March batch were processed in April. Loan servicers are now expected to begin processing the discharges during May. Borrowers typically receive forgiveness within one to two months after eligibility is confirmed.

The department noted that 300 borrowers identified in the Pay As You Earn plan may not qualify for discharge. Officials stated that a system error allowed borrowers with pre-2007 loans to enroll in the plan despite eligibility rules. The department said it will file a superseding status report with additional data later this week.

It provided no further details on whether the 300 borrowers will receive discharges or how prior approvals may be affected. The department also referenced new repayment regulations issued last month that limit new PAYE enrollments after July 1, 2024.