Biden administration to cancel $39B in federal student loans
- 804,000 borrowers are eligible for $39B in debt forgiveness
- This action is meant to fix problems with income-driven repayment plans
- Those who qualify for debt cancellations will be notified starting Friday
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(NewsNation) — Aiming to fix issues with income-driven repayment plans, the Biden Administration is canceling $39 billion in federal student loans for more than 804,000 borrowers.
In a news release Friday, the Department of Education said those who have made either 20 or 25 years of monthly IDR repayments are eligible for forgiveness. Through the IDR program, payment requirements for lower-income borrowers are capped, and their remaining balance is forgiven after a set number of years.
According to the Department of Education, the administration’s actions Friday address “historical inaccuries” in how to count payments that qualify toward forgiveness under IDR plans. Borrowers on IDR plans are eligible for forgiveness after making 240 or 300 monthly payments. Number of required payments vary based on factors like when the person took out the loan, what kind of loans they took and what kind of IDR payment plan they enrolled in.
Inaccurate counts of these payments, the Department of Education said, resulted in borrowers losing “hard-earned progress” on their loan forgiveness.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said in a statement. “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. This Administration will not stop fighting to level the playing field in higher education.”
Borrowers who qualify for this debt cancellation will be notified starting Friday, with discharges beginning 30 days after these emails are sent, the Department of Education said.
In a 6-3 vote last month, the Supreme Court struck down President Joe Biden’s student debt relief plan. Since then, Biden has vowed to find new ways to forgive this debt using the Higher Education Act.
The Education Department launched a regulatory rule-making process to pursue the president’s $430 billion loan relief plan, which is expected to take months.
Reuters contributed to this story.
