The Biden Administration is set to forgive student loans for over 800,000 borrowers as part of their efforts to address administrative failures within the student loan system. Starting on Monday, federal student loan borrowers will begin receiving emails from their loan servicers informing them that their loans have been forgiven.
This relief comes as a result of the Biden administration’s focus on assisting borrowers who qualify for debt cancellation under their repayment plans but haven’t yet received the relief they are entitled to due to administrative errors. It is estimated that more than 800,000 borrowers will be notified of some form of relief over the coming weeks.
Of those impacted, approximately 614,000 borrowers will have their entire student loan debts canceled, while others may still have remaining loans that were taken out at different times. The relief is specifically targeted towards individuals enrolled in income-driven repayment (IDR) plans, which allow for student loan forgiveness by the federal government after 20 or 25 years of payments, depending on the plan.
However, due to flaws in tracking payments, many borrowers enrolled in IDR plans have found themselves making payments well beyond their expected payment end dates without any sign of forgiveness. President Joe Biden views these account adjustments as a step towards addressing the broken student loan system.
Speaking on the matter, President Biden stated, Under these plans, if a borrower makes 20 or 25 years’ worth of payments, they get the remaining balances of their loans forgiven. But because of errors and administrative failures of the student loan system that started long before I took office, over 804,000 borrowers never got the credit they earned, and never saw the forgiveness they were promised – even after making payments for decades.
The borrowers impacted should expect to receive emails from their loan servicers with the subject line your student loans have been forgiven and a message stating, Congratulations! The Biden-Harris Administration has forgiven your federal student loan(s) listed below with [servicer name] in full.
While administration officials were unable to provide an exact timeline for when borrowers will receive their relief due to the need to review each individual loan, they assure borrowers that the process will be completed within a few weeks. It is worth noting, however, that potential lawsuits could arise and potentially interrupt the discharge of these student loan debts.
The Department of Education has been working diligently to address the flawed IDR plans and has estimated that the fixes will result in $39 billion of automatic debt relief. This effort is part of a broader initiative to correct issues in federal loan programs, including providing $45 billion in forgiveness to individuals enrolled in Public Service Loan Forgiveness and $22 billion to borrowers deceived by for-profit colleges.
In total, the Biden administration has announced $116.6 billion in debt relief for over 3.4 million borrowers. It is important to highlight that the Supreme Court rejected a previous program proposed by President Biden to cancel student loan debt on a significant scale. However, the Department of Education is currently working on a new IDR plan that aims to lower monthly payments and decrease the forgiveness timeline.
The move to forgive student loans for over 800,000 borrowers is a significant step by the Biden administration to address issues within the student loan system. As borrowers begin to receive notifications of their forgiven loans, it is hoped that this action will provide much-needed relief for those who have been burdened by student debt for many years.
