Biden Administration Erases $39 Billion in Student Debt for Over 800,000 Borrowers

In a significant move addressing the flaws of the existing student loan system, the Biden administration has announced that 804,000 borrowers will have their student debt forgiven. This amounts to a total of $39 billion in debt that will be wiped away in the coming weeks. The decision follows the implementation of measures to more accurately count qualified monthly payments under income-driven repayment plans.

Education Secretary Miguel Cardona expressed the administration’s commitment to rectifying the failures of the previous system. He stated, “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness.”

There are currently various income-driven repayment plans in place for borrowers with federal student loans. These plans calculate payments based on a borrower’s income and family size, rather than their total outstanding debt. Once a borrower reaches a forgiveness threshold of either 20 or 25 years, their remaining balance is forgiven.

Secretary Cardona emphasized that the recent action aimed to rectify historical failures and administrative errors that led to miscounted qualifying payments made by borrowers. The affected borrowers include Americans with Direct Loans or Federal Family Education Loans held by the Department of Education.

As student loan repayments are set to resume in October after a pause during the pandemic, the Biden administration continues its efforts to fulfill President Joe Biden’s promise of providing debt relief to millions of Americans. Since taking office, his administration has approved $116.6 billion in student debt relief for over 3.4 million Americans.

However, the president’s student loan forgiveness program has faced legal challenges from Republican-led states and conservative groups. Some Republican lawmakers have strongly criticized Biden’s changes to the student loan system. Representative Virginia Foxx, chairwoman of the House Education and the Workforce Committee, accused the president of endangering the postsecondary education financing system for political gain.

President Biden addressed the critics, stating, “Some are even objecting to the actions we announced today, which follows through on relief borrowers were promised, but never given, even when they had been making payments for decades … the disregard for working and middle-class families is outrageous.”

Although the Supreme Court recently struck down one of Biden’s loan forgiveness programs, the administration remains committed to finding alternative ways to cancel debt and make loan forgiveness more accessible. Biden has promised a “new path” forward on debt relief and pledged to use every available tool.

Furthermore, the Department of Education is moving forward with a separate change to the federal student loan system. The new income-driven repayment plan, called SAVE (Saving on a Valuable Education), will be gradually implemented starting this summer. Once fully operational, monthly bills will be reduced by half, and any remaining debt will be canceled after making at least 10 years of payments.

In summary, the Biden administration continues to tackle student loan debt by forgiving $39 billion in debt for over 800,000 borrowers. This latest effort is part of President Biden’s ongoing commitment to provide debt relief to Americans while facing legal challenges and political criticism. The administration is exploring alternative methods to make loan forgiveness more attainable, including the implementation of a new income-driven repayment plan.