Student Loan Forgiveness Could Change for Workers Hit by Layoffs
A new House bill, H.R. 8475, proposes changes to student loan forgiveness rules for borrowers who lose their jobs, allowing months of unemployment deferment to count toward forgiveness. Currently, time spent in unemployment deferment does not count toward income-driven repayment forgiveness timelines, potentially delaying relief. The bill aims to expedite forgiveness and reduce financial strain on borrowers living paycheck to paycheck.
- ▪H.R. 8475, sponsored by Representative Rosa DeLauro, would allow unemployment deferment months to count toward student loan forgiveness.
- ▪Under current rules, months with $0 payments during unemployment do not count toward income-driven repayment or Public Service Loan Forgiveness.
- ▪The bill would also forgive student loan balances after 15 years if monthly payment obligations are met.
- ▪The national unemployment rate was 4.3% in March 2024, up from 3.4% in April 2023, amid ongoing layoffs in tech and other sectors.
- ▪Borrowers would still need to enroll in a qualifying repayment plan and verify income and unemployment status if the bill passes.
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By Jenni FinkSenior Editor, PoliticsShareNewsweek is a Trust Project memberSee more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.A new House bill would change how student loan forgiveness credits are calculated for borrowers who lose their jobs, potentially allowing months of unemployment to count toward loan forgiveness even when no money is paid.An estimated 12 million people with student loan debt are enrolled in income-driven repayment plans, making them eligible for forgiveness after decades of making payments on their loans. Under those repayment plans, eligible enrollees can get an "unemployment deferral" if they lose their job, meaning they pay $0 for their loans without being disqualified from forgiveness.
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