Biden administration forgives $39 billion of student loan debt
The Biden administration announced on Friday that it would wipe out $39 billion of student loan debt for 804,000 borrowers.
Why it matters: The decision follows President Biden's promise to continue pursuing student debt relief following the Supreme Court's decision earlier this month to strike down his administration's loan forgiveness plan.
Details: The relief stems from administrative fixes to existing income-driven repayment plans, according to a press release from the Department of Education.
- The administration said it was addressing "historical failures" in which qualifying payments under those plans that should have brought borrowers closer to qualifying for debt forgiveness, but were not properly accounted for.
- Under existing income-driven repayment plans, borrowers can get their remaining student loan balance wiped after they have been making payments for 20 or 25 years.
- To get some borrowers to that threshold, the administration counted partial and late payments, as well as periods when a borrower was in certain categories of forbearance or deferment.
What they're saying: “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Education Secretary Miguel Cardona said in a statement.
What to watch: Borrowers who have had the debt forgiven will be notified in the coming days, the Department of Education said.
- Federal student loan payments are set to resume in October.