The Biden administration announced Friday that hundreds of thousands of student loan borrowers will have their debt cancelled due to a “fix” to income-driven repayment plans.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said in a statement. “Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers. By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans. This Administration will not stop fighting to level the playing field in higher education.”
The forthcoming discharges are a result of fixes implemented by the Biden-Harris Administration to ensure all borrowers have an accurate count of the number of monthly payments that qualify toward forgiveness under income-driven repayment (IDR) plans. These fixes are part of the Department’s commitment to address historical failures in the administration of the Federal student loan program in which qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for. Borrowers are eligible for forgiveness if they have accumulated the equivalent of either 20 or 25 years of qualifying months. [...]
Today’s action is part of the Biden-Harris Administration’s implementation of the announced in April 2022. That action addressed historical inaccuracies in the count of payments that qualify toward forgiveness under IDR plans. Under the Higher Education Act and the Department’s regulations, a borrower is eligible for forgiveness after making 240 or 300 monthly payments—the equivalent of 20 or 25 years on an IDR plan or the standard repayment plan, with the number of required payments varying based upon when a borrower first took out the loans, the type of loans they borrowed, and the IDR payment plan in which the borrower is enrolled. Inaccurate payment counts have resulted in borrowers losing hard-earned progress toward loan forgiveness. This action also addresses concerns about practices by loan servicers that put borrowers into forbearance in violation of Department rules. The Department previously began discharging loans for borrowers who reached forgiveness for Public Service Loan Forgiveness (PSLF) through these changes. (Education Department)
The announcement comes after President Biden said he would "find other ways to deliver relief to hard-working middle-class families" after the Supreme Court ruled against his administration's student loan debt handout program.
