Biden administration forgives student loan debt for 804,000 borrowers
The Biden Administration aims to address the “historical failures in the administration" by forgiving $39 billion in student debt in the coming weeks.
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The Education Department announced on Friday that it would forgive federal student loans to 804,000 borrowers—this action comes after the U.S. Supreme Court found that President Biden's student loan forgiveness plan was unconstitutional in a 6-3 ruling last month. Its passage would have granted forgiveness of up to $20,000 in debt to more than 40 million borrowers.
$39 billion in federal student loans will be automatically discharged in the coming weeks in what the Department says is an effort to fix “historical failures in the administration.” However, depending on the plan, federal student loan borrowers are eligible for forgiveness after 20 or 25 years of qualifying months, which for some, qualifying payments “should have moved borrowers closer to forgiveness were not accounted for,” said the press release.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” said U.S. Secretary of Education Miguel Cardona 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.”
The income-driven repayment (IDR) plans have shown historical inaccuracies; the Higher Education Act and Education Department’s regulation states a borrower is eligible for forgiveness after making 240 or 300 monthly payments in an IDR plan or standard repayment plan.
“Inaccurate payment counts have resulted in borrowers losing hard-earned progress toward loan forgiveness. This action also addresses concerns about practices by loan services that put borrowers into forbearance in violation of Department rules,” said the Department in a statement.
Borrowers should expect to be notified Friday by the Department of Education and will begin to see discharges 30 days after.