The Biden administration is automatically canceling the education debt for 804,000 borrowers, providing relief to the tune of $39 billion. The cancellations stem from administrative fixes the Department of Education (DOE) has been making to the student loan system’s income-driven repayment 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,” CNBC quoted US education secretary Miguel Cardona today (July 14).
Borrowers on most plans are entitled to forgiveness after 20 years of payments and depend on Federal Student Aid (FSA) and its servicers to accurately track their progress toward relief. But this system, ridden with flaws, has led to borrowers “missing out on progress toward IDR forgiveness,” the federal agency said last April.
The DOE will notify eligible borrowers in the coming days, CNBC reported.
Quotable: Biden on lessening student loan burdens
“I will stop at nothing to find other ways to deliver relief to hard-working middle-class families. My Administration will continue to work to bring the promise of higher education to every American.” —US president Joe Biden after the Supreme Court struck down his $430 billion student loan forgiveness plan on June 30
Biden’s other student loan plans, by the digits
37 million: How many people Biden’s $430 billion loan forgiveness program would’ve provided relief to, had the Supreme Court not struck it down on June 30
Nearly 90%: Relief from Biden’s student loan foregiveness plan which would have gone to borrowers making less than $75,000 a year, while none would have gone to borrowers making more than $125,000
12 months: Duration of the DOE’s “on-ramp” to repayment program. Between Oct. 1, 2023, and Sept. 30, 2024, financially vulnerable borrowers who miss monthly payments won’t be “considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies,” the agency said
$6,121: How much borrowers will pay back for every $10,000 they borrow under the SAVE plan, for Saving on a Valuable Education, announced this January. Under the old plan, borrowers repaid $10,956 for every $10,000 they borrowed.
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