In a significant move to address the mounting burden of student loan debt, the Biden administration announced Friday it would automatically forgive $39 billion in student debt for more than 800,000 borrowers. This relief is a direct result of fixes made to the income-driven repayment plans within the student loan system.
Under these repayment plans, the Department said the borrowers become eligible for debt cancellation by the government after making payments for either 20 or 25 years, depending on their loan and plan type, and when they initially borrowed. However, the Biden administration discovered that previous calculations did not accurately account for payments made by borrowers, which left many individuals stuck in a flawed system.
U.S. Secretary of Education Miguel Cardona expressed his concerns, stating, “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness.” Recognizing the flaws, the Biden administration took steps to rectify the situation.
To ensure that borrowers reached the threshold for forgiveness, the administration included payments made during certain deferments, forbearances, and even partial or late payments. By including these overlooked payments, the administration aimed to give relief to those who had been left behind by the previous system’s shortcomings.
This announcement comes on the heels of the Supreme Court’s ruling against President Joe Biden’s comprehensive student loan forgiveness plan, which would have provided relief to approximately 37 million individuals. Despite this setback, the Biden administration remains committed to finding alternative ways to alleviate the burden of student loan debt.
In the coming days, the Education Department will notify eligible borrowers about their forgiveness status, providing much-needed respite to those grappling with the weight of student loans. This significant step highlights the administration’s ongoing efforts to address the student debt crisis and support individuals seeking financial stability and educational opportunities.
(With inputs from agencies)
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