2023-12-07 06:16:43
(CNN) – The Department of Education reported this Wednesday that it approved the cancellation of almost $5 billion in debt…
(CNN) – The Department of Education reported Wednesday that it approved the cancellation of nearly $5 billion in federal student loan debt, increasing to $132 billion the total amount of relief provided by the Biden Administration for more than 3.6 million borrowers.
Although the Supreme Court struck down President Joe Biden’s signature student loan forgiveness program, which promised up to $20,000 in debt relief for low- and middle-income borrowers, the government has looked for other ways to provide the help.
“We continue to seek an alternative path to providing student debt relief to as many borrowers as possible as quickly as possible,” Biden said in a statement Wednesday.
The debt cancellations have been made through existing federal student loan forgiveness programs, which are limited to specific categories of borrowers, such as public sector workers, people defrauded by for-profit colleges, and borrowers who have paid for at least least 20 years.
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According to Wednesday’s announcement, those borrowers who are eligible for relief qualify in one of two ways: either under the Public Service Loan Forgiveness program, which eliminates remaining student loan debt after qualified public sector make monthly payments for 10 years; or because they have made at least 20 years of qualified contributions in an income-based repayment program, but previously did not get credit for all of their student loan payments.
Most of these borrowers were notified in November that their outstanding federal student loan debt would be canceled, and they can expect to see changes to their accounts in the coming weeks.
The Biden Administration has provided student loan forgiveness through these existing programs continuously since taking office. To date, it has granted more student loan relief than any other administration, in part because of efforts to temporarily expand some programs and correct past administrative errors made on borrowers’ student loan accounts.
“The latest measures are the result of this administration’s tireless efforts to fix our country’s broken student loan system and get hard-won debt relief into the hands of eligible borrowers,” said Secretary of State Education, Miguel Cardona, in a call with journalists.
Review past payments and fix errors
Many borrowers are seeing debt relief thanks to a one-time accounting of their past payments, an effort by the Biden administration to correct what officials call “past administrative failures.”
Borrowers enrolled in income-driven repayment plans, which have been available in some form since 1993, are generally eligible for debt forgiveness after making qualifying payments for at least 20 years. The plans reduce monthly payments by tying them to the borrower’s income and family size.
However, the Department of Education has historically had trouble tracking borrower payments.
Last year, the U.S. Government Accountability Office recommended that the department do more to ensure borrowers receive the forgiveness they are entitled to, after discovering there were thousands of loans still in repayment that could already be eligible. for condonation.
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The one-time effort to settle the score was first announced by the Biden administration in April 2022, and cancellations did not begin until this year. The department is expected to report on additional groups of borrowers eligible for student debt relief every two months through the spring of next year.
Some Republican lawmakers and conservative groups argue that the administration does not have the power to count the payments. The Education Department faces at least one lawsuit over the reckoning, filed by the New Civil Liberties Alliance on behalf of the conservative groups Cato Institute and the Mackinac Center for Public Policy.
Payments resumed in October
Borrowers had to resume payments on their federal student loans in October for the first time in more than three years, after the pandemic pause ended, which froze borrowers’ accounts.
In addition to canceling some student loan debt, the Biden administration has also made efforts to reduce borrowers’ monthly bills as payments resume.
A new payment plan launched this summer, called Savings on a Valued Education (SAVE), offers the most generous terms and will likely offer the smallest monthly payment for low-income borrowers.
Who benefits from Biden’s elimination of student debt?
The Department of Education is also providing a 12-month access period through September 2024. During this temporary respite, borrowers who are struggling to make their monthly payments are protected from some of the worst consequences of making a payment, including credit reporting. negatives. However, some Democratic lawmakers recently expressed concern that borrowers could see implementation errors during the access period.
The Biden administration is making another attempt to create a unique student loan forgiveness program. This time, the administration is relying on a different law than the one it used for the program struck down by the Supreme Court and is conducting a formal rule-making process, known as “negotiated rulemaking.” The process takes months and a proposed rule is not expected to be published until next year. The process could face legal challenges.
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