Biden Administration Announces Debt Cancellation for 800,000 Borrowers
The Department of Education under the Biden administration has taken a significant step towards relieving borrowers of their student loan debt obligations. On Friday, July 14, it was announced that more than 800,000 borrowers would have $39 billion of their debt canceled. This move comes as part of a one-time adjustment to the Income-Driven Repayment (IDR) program, following revelations that many eligible borrowers were not receiving the cancelation they deserved.
The news has been met with widespread approval from advocates and campaigners who have long pushed for relief for borrowers trapped in endless cycles of loan repayments. Persis Yu, Deputy Executive Director and Managing Counsel at the Student Borrower Protection Center, expressed her joy, saying, After years of campaigning and advocacy, it is a huge victory that nearly a million borrowers who have been trapped in decades of never-ending payments will finally get the relief Congress intended.
The Biden administration has acknowledged that bureaucratic issues resulted in the mismanagement of low- and middle-income borrowers with IDR plans. Lost paperwork, processing delays, difficulties with applying, and accruing interest all played a part in preventing borrowers from accessing the cancelation they were entitled to, as confirmed by the Federal Student Aid office.
This recent debt forgiveness announcement is only the beginning of the administration’s plans to address federal student loan debt. The focus is on canceling part or all of the loans for individuals who either qualify for or were enrolled in the Income-Driven Repayment Program. The current round of cancelation will likely benefit those who have been making repayments for a sufficient length of time to be eligible for total forgiveness, typically around 20-25 years. Further cancelations will follow, with some borrowers seeing their accounts cleared entirely and others experiencing significant reductions in their loan balances.
To be eligible for this particular round of cancelation, borrowers must have a Direct Loan or Federal Family Education Loan (including Parent PLUS) and have met the necessary forgiveness threshold through receiving credit toward IDR forgiveness within specific periods.
Persis Yu warns that despite this substantial relief for over 800,000 borrowers, there is still much work to be done. She stated, Make no mistake — over 804,000 people are receiving relief with this action because of 804,000 failures — and this is only the tip of the iceberg. Working people with student loan debt have been made collateral damage by a dysfunctional student loan system. She emphasized the structural incompetence present within the system, which disproportionately affects vulnerable, low-income, and black and brown borrowers.
Affected borrowers will be notified via email by the Biden administration in the coming days, with loan discharges commencing 30 days after the emails are sent.
By taking this significant step towards canceling student loan debt, the Biden administration aims to provide relief to hundreds of thousands of individuals burdened by their loan repayments. This move aligns with their commitment to addressing the flaws in the student loan system and delivering justice to those who have long been suffering under its weight.
