The Biden administration has announced automatic forgiveness of $39 billion in student loans for 804,000 borrowers in an effort to help those who are struggling with debt from student loans. This debt relief is a result of improvements made to the income-driven repayment plans within the student loan system.
Depending on their loan and plan type, borrowers can become eligible for the government to forgive any outstanding debt under these repayment plans after making payments for either 20 or 25 years. However, the Biden administration identified a flaw in the system where certain payments that should have contributed to debt reduction were not properly accounted for.
U.S. Secretary of Education Miguel Cardona acknowledged the longstanding issue, stating that borrowers had fallen through the cracks of a broken system. To rectify this, the administration made adjustments, including counting payments made during deferments, forbearances, and partial or late payments, to ensure borrowers would meet the criteria for forgiveness.
This announcement comes in the wake of the Supreme Court’s rejection of President Joe Biden’s broader student loan forgiveness plan, which aimed to provide relief to approximately 37 million individuals.
In the coming days, the Education Department will notify eligible borrowers of their eligibility for automatic forgiveness, providing much-needed respite for those grappling with student loan burdens.idewn