The Biden administration has announced a $39 billion student loan forgiveness plan for 804,000 borrowers as part of fixes in “administrative failures” that had held up relief for borrowers under their income-driven repayment (IDR) plans.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said in a statement. “Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers.
“By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans,” Cardona added. “This Administration will not stop fighting to level the playing field in higher education.”
An income-driven repayment plan for student loan borrowers sets the monthly payment amounts on a level that’s affordable for the individual based on their income and family size.
There are four plans available that calculate payment amounts ranging from 10 to 20 percent of the person’s discretionary income. Payments can also be as low as $0.
Based on the plan, debts are forgiven once payments have been done for 20–25 years or “after making 240 or 300 monthly payments.” The 804,000 borrowers who have been provided relief are part of the repayment plan.
According to officials, loan borrowers were paying beyond their payment end-dates due to administrative oversight in tracking payments. “Inaccurate payment counts have resulted in borrowers losing hard-earned progress toward loan forgiveness.”
The latest action by the education department seeks to fix this error in repayment plans, and the amount is estimated to be $39 billion, which will be “automatically discharged in the coming weeks.”
Furthermore, the department will “continue to identify and notify borrowers who reach the applicable forgiveness thresholds (240 or 300 qualifying monthly payments, depending on their repayment plan and type of loan) every two months until next year when all borrowers who are not yet eligible for forgiveness will have their payment counts updated.”
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