Biden administration announces $39 billion in student loan forgiveness
"The Education Department said the plan will help more than 800,000 borrowers
The Biden administration announced Friday that it will forgive the student loans of more than 800,000 borrowers who enrolled in income-driven repayment plans.
The plan will forgive $39 billion in federal student loans, according to the Education Department, through “fixes” to the count of monthly payments borrowers have made.
The Education Department first announced last year that it would offer a one-time adjustment to help address any inaccuracies in payment counts for borrowers in the plans.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress toward forgiveness,” Education Secretary Miguel Cardona said in a statement Friday. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve.” he said.
The forgiveness comes weeks after the Supreme Court rejected a broader plan by the Biden administration to forgive up to $20,000 in federal student debt for tens of millions of borrowers meeting certain income limits. The high court ruled the president did not have the authority to implement the new plan. In response, President Biden said he would pursue a “new path” to give borrowers relief.
The debt relief announced Friday affects borrowers enrolled in income-driven repayment plans, which allow forgiveness after making a certain number of monthly payments.
But the plans have drawn criticism over the years because of poor communication between the Education Department, loan servicers and borrowers. A NPR investigation in 2022 detailed failures in the program.
According to the Education Department, Friday’s action “also addresses concerns about practices by loan servicers that put borrowers into forbearance in violation of Department rules.”
In April 2022, the Education Department said it would offer a one-time adjustment to address any inaccurate payment counts.
“At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable,” Education Undersecretary James Kvaal said in a statement. “Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”
In coming days, qualifying borrowers who have met the necessary threshold for forgiveness will be notified. Types of loans covered include Direct Loans or Federal Family Education Loans held by the Education Department, including Parent PLUS loans."