Biden administration forgives millions in student loan debt

The Biden administration has announced it has forgiven $39bn in student loan debt for 804 000 borrowers who have income-driven repayment plans.

The relief is a result of “fixes” the government says it made to the plans.

Qualifying borrowers enrolled in the plan will be notified if their loans will be discharged in the coming weeks, the Department of Education said.

The announcement comes weeks after the US Supreme Court struck down President Joe Biden’s broader student loan plan.

The move would fix administrative errors that meant some borrowers’ payments did not count toward them qualifying for student loan relief, the education department said.

“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” US Secretary of Education Miguel Cardona said in a statement.

Borrowers are eligible for the forgiveness after 20 or 25 years of payments, depending on their plan, officials said.

The US government offers multiple types of income-driven repayment plans, known as IDR plans, under which borrowers make a monthly loan payment based on their income over the course of 20 or 25 years.

The administration first announced it would make changes to the plan in April 2022 to address “historical inaccuracies in the count of payments that qualify toward forgiveness under IDR plans”, the education department said.

Last month, in a 6-3 ruling, the US Supreme Court effectively shut down Biden’s larger plan to cancel billions of dollars in student loans for more than 40 million Americans. The Supreme Court found the Biden administration overstepped its authority with the program, which would have forgiven about $10 000 per borrower, and up to $20 000 in some cases.

Soon after the ruling was announced, Biden pledged to find a different way to offer student loan forgiveness. “Today’s decision has closed one path. Now we’re going to start another,” he said.

Biden has taken a series of steps to provide student loan relief to smaller groups via executive actions since he took office. For instance, last year he cancelled student loan debt for 200 000 borrowers who said they were harmed or defrauded by their universities. (BBC)

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