Student Loan Forgiveness Could Change for Workers Hit by Layoffs
Summary
A new bill in the House wants to change how months spent unemployed count toward student loan forgiveness for people on income-driven repayment plans. It would allow those months when no payments were made due to unemployment to still count toward forgiveness, potentially helping people pay off loans faster after layoffs.Key Facts
- About 12 million people use income-driven repayment (IDR) plans for student loans in the U.S.
- Currently, unemployment deferment lets borrowers temporarily pay $0 without losing eligibility for forgiveness, but those months don’t count as payments toward forgiveness.
- The proposed bill, H.R. 8475, would count unemployment deferment months as qualifying payments for forgiveness.
- This change could speed up loan forgiveness for people who are laid off and cannot make payments.
- The bill also proposes forgiving any remaining loan balance after 15 years of payments, rather than the current 20 or 25 years.
- The bill is sponsored by Representative Rosa DeLauro and co-sponsored by Representative Eugene Vindman, both Democrats.
- The U.S. unemployment rate was 4.3% in March 2024, up from 3.4% in April 2023, with layoffs in sectors like technology.
- Income-driven repayment plans calculate monthly payments based on income and family size, forgiving the rest after a set time if all requirements are met.
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