The Biden administration has recently announced that it will be forgiving $39 billion in student loan debt for approximately 804,000 borrowers who are on income-driven repayment plans. This relief is a result of the government’s effort to rectify certain issues with these plans. The Department of Education has stated that qualifying borrowers who are enrolled in the plan will be notified in the coming weeks if their loans will be discharged.
The decision to forgive this substantial amount of student loan debt comes shortly after the US Supreme Court struck down President Joe Biden’s broader student loan plan. However, the current forgiveness program aims to address administrative errors that prevented some borrowers’ payments from counting towards their eligibility for student loan relief. US Secretary of Education Miguel Cardona commented on the matter, stating that borrowers have fallen through the cracks of a broken system for far too long, which has failed to accurately track their progress towards forgiveness.
Under the income-driven repayment plans, borrowers are eligible for loan forgiveness after making payments for 20 or 25 years, depending on their specific plan. The US government provides several types of these income-driven repayment plans, allowing borrowers to make monthly payments based on their income over a span of 20 or 25 years.
The administration initially announced changes to the plan in April 2022 to address historical inaccuracies in the count of payments that qualify for forgiveness under the income-driven repayment plans, as reported by the education department.
Last month, the US Supreme Court ruled against Biden’s larger plan to cancel billions of dollars in student loans for over 40 million Americans in a 6-3 decision. The court found that the Biden administration had exceeded its authority with the program, which aimed to forgive around $10,000 per borrower, and up to $20,000 in certain cases.
Following the ruling, President Biden promised to explore alternative methods to offer student loan forgiveness. He stated, Today’s decision has closed one path. Now we’re going to start another.
Since taking office, President Biden has taken various actions to provide student loan relief to smaller groups through executive actions. For instance, last year, he cancelled student loan debt for 200,000 borrowers who claimed to have been harmed or defrauded by their universities.
This forgiveness of $39 billion in student loan debt for borrowers on income-driven repayment plans showcases the Biden administration’s ongoing efforts to address the issue of student loan debt in the United States. With millions of Americans burdened by student loans, these measures aim to alleviate some of the financial stress faced by borrowers. It remains to be seen how these actions will impact the broader landscape of student loan forgiveness and whether further initiatives will be pursued in the future.
