Breaking News: Biden Administration Announces Forgiveness of Federal Student Loan Debt
Starting Monday, hundreds of thousands of federal student loan borrowers will be receiving emails from their loan servicers with the subject line “Your student loans have been forgiven.” This announcement comes as part of the Biden administration’s efforts to cancel debt for 804,000 borrowers who qualify for relief under their repayment plans but haven’t received it due to administrative failures.
According to exclusively obtained confirmation notices by ABC News, the emails informing borrowers of the debt forgiveness were set to begin on Monday. In the coming weeks, it is expected that over 800,000 borrowers will be notified of some relief.
Out of these borrowers, approximately 614,000 individuals are anticipated to have their entire student loan debts canceled, while others may still have remaining loans from different periods. The relief is specifically targeted at those who enrolled in income-driven repayment (IDR) plans, which allow student loan debts to be forgiven by the federal government after 20 or 25 years of consistent payments, depending on the plan.
However, due to errors in payment tracking, many borrowers enrolled in IDR plans have been left paying beyond their payment end dates without receiving any forgiveness. President Joe Biden, determined to rectify these shortcomings, sees the debt forgiveness as an essential step towards fixing what he views as a broken student loan system.
President Biden said in a statement to ABC News, “Over 804,000 borrowers never got the credit they earned, and never saw the forgiveness they were promised – even after making payments for decades. I was determined to right this wrong.”
Education Secretary Miguel Cardona expressed similar sentiments, stating, “We are standing up for borrowers who did everything right, but whose progress toward forgiveness went uncounted due to past administrative failures that the Biden-Harris team has worked tirelessly to correct.”
While the Department of Education did not provide an exact timeline for the completion of the relief process, officials assured that it would be done within weeks. Potential lawsuits may temporarily interrupt the debt discharges. However, a recent lawsuit against the Department of Education on the grounds of exceeding its authority was dismissed by a U.S. district court judge in Michigan.
In total, the fixes to the IDR plans made by the Department of Education will result in $39 billion of automatic debt relief. This effort is part of a broader wave of changes to federal loan programs, including forgiveness for those enrolled in Public Service Loan Forgiveness and debt relief for borrowers defrauded by for-profit colleges. The Biden administration’s debt relief measures have so far totaled $116.6 billion for over 3.4 million borrowers.
While Biden’s previous program to cancel student loan debt on a large scale was rejected by the Supreme Court in June, a new IDR plan has been announced. This plan will reduce monthly payments to 5% of a person’s discretionary income and decrease the forgiveness timeline to 10 years for loans under $12,000.
Additionally, the Department of Education is in the process of rulemaking to explore debt forgiveness through the Higher Education Act. However, legal challenges are expected for this avenue as well.
The Biden administration’s initiative to alleviate student loan debt is set to bring relief to hundreds of thousands of borrowers who’ve been burdened with debt for decades. As the emails begin to arrive in borrowers’ inboxes, their long-awaited forgiveness has become a reality.