President Joe Biden announced that his administration will forgive $39 billion in student loan debt for more than 804,000 borrowers last week.
The relief plan targets individuals with direct or federal family education loans who enrolled in income-driven repayment plans – a system that adjusts monthly loan payments based on individual income and family size – and those who are still paying back their loans after 20 to 25 years of consistent payments, according to a press release published by the Department of Education last week. The release states that this decision supports the administration’s commitment to combating “historical failures” of the federal student loan programs to accredit all payments made under IDR plans.
“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 the release.
Biden’s decision aligns with the payment count adjustment launched in April 2022 to identify borrowers who should qualify for loan forgiveness but don’t because errors with the Department of Education’s system for tracking payments failed to credit all who successfully paid each month. Borrowers who consistently qualify paid the amount requested under their IDR plan for 20 to 25 years, which if properly recorded, would grant them aid from Public Service Loan Forgiveness – a program created to forgive loans for government and not-for-profit employees with at least 120 qualifying monthly loan payments.
“These borrowers will join the millions of people that my Administration has provided relief to over the past two years – resulting in over $116 billion in loan relief to over 3 million borrowers under my Administration,” Biden said in a statement last week.
The announcement comes two weeks after the Supreme Court shut down Biden’s federal student loan forgiveness plan, which would relieve borrowers $20,000 of debt if they received a Pell Grant – a federal grant package created to aid low-income families – while enrolled in school and up to $10,000 for other borrowers. Biden announced his commitment to creating a new plan to aid borrowers who would have received aid if his plan passed, according to a Washington Post report published late last month.
“And, when the Supreme Court made the wrong decision, I immediately announced a new plan to open an alternative path to relief for as many borrowers as possible, as soon as possible,” Biden’s statement reads.
The Department of Education sent an email to all individuals eligible for forgiveness on July 14 and automatic discharge of their loans will begin 30 days after receiving the notification, the release states.
