Last month with the Supreme Court’s decision to block student loan forgiveness program, President Biden promised that he would. Last week, the Biden Administration took a major step towards fulfilling that promise with the announcement that under a new plan 804,000 federal borrowers would receive $39 billion in forgiveness for their student loan debt.
On July 14, the Department of Education began notifying more than 804,000 borrowers that they have a total of $39 billion in Federal student loans that will be automatically discharged in the coming weeks.
For Biden, it is a delivery on a campaign commitment.
Said Biden, “Starting today, over 800,000 student loan borrowers who have been repaying their loans for 20 years or more will see $39 billion of their loans discharged because of steps my Administration took to fix failures of the past. These borrowers will join the millions of people that my Administration has provided relief to over the past two years – resulting in over $116 billion in loan relief to over 3 million borrowers under my Administration.
“But we’re not stopping there, Biden continued. “My Administration has worked hard to secure the largest increases to Pell Grants in a decade, fixed broken loan programs such as Public Service Loan Forgiveness, and created a new income-driven repayment plan that will cut undergraduate loan payments in half and bring monthly payments to zero for low-income borrowers. And, when the Supreme Court made the wrong decision, I immediately announced a new plan to open an alternative path to relief for as many borrowers as possible, as soon as possible.”
The $39 billion in relief is part of the Department’s commitment to address historical failures in the administration of the Federal student loan program in which qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for. Borrowers are eligible for forgiveness if they have accumulated the equivalent of either 20 or 25 years of qualifying months.
“At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable,” said Under Secretary James Kvaal. “Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” said U.S. Secretary of Education Miguel Cardona. “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.
To be eligible, an individual must meet the following requirements:
- Borrower must have made 240 or 300 monthly payments or spent 20-25 years on an income-driven repayment plan or standard repayment plan. An income-driven payment plan sets loan payments at an amount that is intended to be affordable for the borrower based on their income;
- Borrower’s annual income must have fallen below $125,000 for individuals or $250,000 for married couples.
“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 said. “This Administration will not stop fighting to level the playing field in higher education.”