Biden administration will erase student loan debt for people with severe disabilities

The Biden administration announced Thursday it would erase student loan debt for over 323,000 borrowers who have permanent, severe disabilities and have limited incomes as a result.

Why it matters: The move will effectively eliminate nearly $5.8 billion of student debt.

• The Department of Education further announced that they would "indefinitely" extend a policy that says borrowers won't have to disclose information on their earnings.
• Current rules require borrowers to prove their income in order to stop paying loans, but thousands of people had their loans reinstated because they failed to prove their earnings, AP reports.

The big picture: Prominent Democratic lawmakers continue to call on the administration to relieve student debt, including Senate Majority Leader Chuck Schumer, who requested that Biden cancel as much as $50,000 of student loan debt per borrower.

• In July, the administration canceled $55.6 million in student loan debt for victims of for-profit college fraud.
• Americans owe roughly $1.6 trillion in student loans, and a pandemic-related moratorium on payments was set to expire on Sept. 30, before it was extended to January 2022.

What they're saying: “We’ve heard loud and clear from borrowers with disabilities and advocates about the need for this change and we are excited to follow through on it,” Cardona said in a statement.

• "This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support," he continued.

Editor’s note: This post has been updated to clarify that the moratorium on student loan payments was extended until next January.