The announcement comes as the Education Department fails a financial audit for the second consecutive year.
The U.S. Department of Education on Friday said it’s canceling nearly $5 billion in federal student loan debt owed by some 73,600 borrowers, a majority of whom are public servants.
The announcement marks the the latest effort by the Biden administration to target specific groups of federal student loan borrowers by tweaking and expanding rules under existing relief programs, after the U.S. Supreme Court shot down its broader and more expensive debt cancellation plan.
Of those 73,600 beneficiaries announced on Friday, 43,900 are receiving $3.2 billion in student loan discharge through Public Service Loan Forgiveness, a program that erases outstanding student loan balances for those working in public service jobs like teachers, nurses, or police officers once they have made 10 years of qualifying payments.
In 2021, the Biden administration overhauled the Loan Forgiveness program, allowing hundreds of thousands of borrowers to get additional credit toward the final discharge.
The other $1.7 billion is going to 29,700 people currently enrolled in income-driven repayment plans. Under such a plan, the amount of monthly payment is adjusted based on the borrower’s income and family size, and the borrower may be eligible to have any remaining debt wiped out after a certain amount of time in repayment, typically after 20 years for those with undergraduate student loans and 25 years for those with graduate school loans.
According to the Education Department, those 29,700 borrowers have been in repayment for at least 20 years and have earned their eventual debt relief, but have not received it because loan servicers failed to “accurately account” for their payments.
Including Friday’s relief, the Biden administration has so far approved the cancellation of over $136 billion in student loan debt for more than 3.7 million people.
“Today we are helping borrowers who were promised help with their loans, planned their lives around those promises, and earned forgiveness through years of payments,” U.S. Under Secretary of Education James Kvaal said in a statement, promising to help “all of those harmed by the broken student loan system.”
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