Biden Administration Announces $39 Billion Student Loan Forgiveness.
July 14, 2023: In a significant move, the Biden administration has unveiled a plan to automatically forgive $39 billion in student loan for 804,000 borrowers. This action comes as a result of addressing flaws in the income-driven repayment plans of the student loan system. Under these plans, the government cancels any remaining debt for borrowers after making payments for 20 or 25 years, depending on their borrowing and plan specifics.
Previously, the system failed to account for payments that should have brought borrowers closer to becoming debt-free. U.S. Secretary of Education Miguel Cardona acknowledges the flawed system and highlights the administration’s commitment to rectifying the situation.
To ensure borrowers receive the forgiveness they are entitled to, the Biden administration has considered payments made during certain deferments and forbearances and partial or late payments. This decision to count previously unaccounted payments has led to the forgiveness of $39 billion in student debt for more than 800,000 borrowers.
Although this debt relief is a significant victory for borrowers, it is a necessary step to address the failures of the student loan system. Persis Yu, deputy executive director at the Student Borrower Protection Center, emphasizes that this relief is long overdue and highlights the need for systemic improvements to prevent similar failures in the future.
It is important to note that this forgiveness announcement comes after the Supreme Court struck down President Biden’s broader student loan forgiveness plan, which aimed to provide relief to approximately 37 million people. The Education Department will notify eligible borrowers in the coming days regarding the automatic discharge of their debt.
This action by the Biden administration is part of its ongoing efforts to ease the burden of student debt and make higher education more accessible. By rectifying past administrative failures, the administration aims to ensure borrowers receive the debt forgiveness they deserve. The Education Department also plans to identify additional groups of borrowers who meet the forgiveness threshold every two months.
While this debt relief is a step in the right direction, there is still much work to be done to fix the broken student loan system and alleviate the financial burdens millions of borrowers face.