$39 Billion in Federal Student Loans to be Automatically Discharged, Biden-Harris Administration Takes Historic Step Towards Loan Forgiveness

Department of Education to Discharge $39 Billion in Student Loan Debt

Washington, D.C. – In a major move to address failures in the administration of the Federal student loan program, the Department of Education will begin notifying over 804,000 borrowers that their Federal student loans totaling $39 billion will be automatically discharged in the coming weeks. This announcement is part of the Biden-Harris Administration’s efforts to provide relief to borrowers who have been burdened by student loan debt.

Under the fixes implemented by the administration, borrowers will now have an accurate count of the number of monthly payments that qualify for forgiveness under income-driven repayment plans. This step was taken to rectify the historical inaccuracies that prevented borrowers from progressing towards loan forgiveness. To be eligible for forgiveness, borrowers must have accumulated the equivalent of either 20 or 25 years of qualifying monthly payments.

U.S. Secretary of Education Miguel Cardona emphasized the urgency in addressing the flaws of the previous system, stating that borrowers were neglected in a broken system that failed to accurately track their progress towards forgiveness. Cardona added, “This Administration will not stop fighting to level the playing field in higher education.”

This action is in line with the Biden-Harris Administration’s commitment to implementing changes announced in April 2022, which addresses historical inaccuracies in the count of payments that qualify towards forgiveness under income-driven repayment plans. Previously, inaccurate payment counts caused borrowers to lose their progress towards loan forgiveness.

Going forward, the Department of Education will proactively identify and notify borrowers who reach forgiveness thresholds every two months until next year, ensuring that all borrowers are updated on their payment counts. Borrowers will also have the option to opt out of the discharge if they wish to continue repayment.

The Biden-Harris Administration has already made significant strides in student debt relief, with over $116.6 billion in student loan forgiveness approved for more than 3.4 million borrowers. This includes $45 billion for public servants through improvements to Public Service Loan Forgiveness, $5 billion for borrowers with a total and permanent disability, and $22 billion for borrowers who were cheated by their schools or experienced school closures.

In addition to addressing past issues, President Biden and the Department of Education are focused on ensuring that borrowers have access to affordable payments going forward. They have recently introduced the Saving on a Valuable Education (SAVE) plan, which offers the most affordable payment plan ever for undergraduate loans, reducing payments by half compared to other income-driven repayment plans. The SAVE plan also protects more of a borrower’s income for basic needs.

The Department of Education will continue its efforts to alleviate the burden of student loan debt and level the playing field in higher education. With the automatic discharge of $39 billion in student loan debt, thousands of borrowers will have the opportunity to build a brighter financial future.