Photo: Evan Vucci (AP)
On Friday, it was announced that the Biden administration would automatically forgive $39 billion in student debt for 804,000 borrowers. This aid is due to adjustments to the student loan system’s income-driven repayment plans. According to those plans, after 20-25 years of repayment borrowers will have the rest of the debt canceled by the government.
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This would vary depending on when they borrowed as well as their plan and loan type. Payments that made borrowers closer to being debt-free weren’t accounted for in the past, per the Biden administration. In a statement, U.S. Secretary of Education Miguel Cardona explained:
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress toward forgiveness. By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve.”
The Biden administration will also count payments from borrowers with deferments and forbearances as well as those who made partial or slow payments to assist with forgiveness. Though this is a major feat, deputy executive director at the Student Borrower Protection Center Persis Yu said that borrowers are entitled to this relief.
“…Over 804,000 people are receiving relief with this action because of 804,000 failures — and this is only the tip of the iceberg. Working people have been made collateral damage by a dysfunctional student loan system.” This decision comes just weeks after the Supreme Court dismissed President Biden’s student loan forgiveness plan.
That plan would have helped around 37 million people. Those who qualify for relief will be contacted in the upcoming days, the Education Department said. They also stated that Friday’s announcement “also addresses concerns about practices by loan servicers that put borrowers into forbearance in violation of Department rules.”
