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President Biden cancels $39 billion in student loan debt for 800,000 borrowers

The Department of Education is implementing its payment count adjustment for student loan borrowers on IDR payment plans, 800K will have debts canceled.

Update:
Biden does an end run around blockage of student loan debt relief, forgives $39bn for 800K

After the Supreme Court struck down the White House’s program to forgive up to $20,000 in student loan debt on 30 June, President Biden spoke to the nation promising that his administration would find another way to bring debt relief to millions of Americans. “We’re not going to waste any time on this. We’re getting moving on it,” said Biden from the White House with Education Secretary Miguel Cardona.

The “new approach” didn’t take long to materialize with Federal Student Aid releasing the rules for a new Income-Driven Repayment (IDR) plan, called the Saving on a Valuable Education (SAVE) plan. The latest move, announced on Thursday the US Department of Education said that it would be automatically discharging $39 billion in student loan debt for over 800,000 borrowers.

This will be welcome relief for those borrowers who were preparing to resume sending their monthly payments come October, and with interest to begin accruing again in September. While it falls short of the over 38 million covered forgiving around $400 billion by the broader plan shot down by six justices, Biden promised that the new path would be “legally sound.”

President Biden cancels $39 billion in student loan debt for 800,000 borrowers

This latest debt forgiveness by the Biden administration, which brings the total to nearly $117 billion for 3.4 million borrowers, is part of the Education Department’s efforts to “address historical failures in the administration of the Federal student loan program” where borrowers’ qualifying payments made should’ve brought them closer to having their debt discharged were not accounted for.

Specifically, over 804,000 borrowers enrolled in income-driven repayment (IDR) plans who made the necessary 240 or 300 monthly payments, the equivalent to 20 or 25 years of qualifying months, but that were inaccurately tallied. Millions more will have their loans adjusted as well under this program which will continue into next year.

“Today, the Biden-Harris Administration is taking another historic step to right these wrongs,” said Secretary Cardona. “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness.”

This latest action is part of the payment count adjustment that was announced in April last year. Errors made either tracking payments or advising properly on the payment process by companies tasked with helping guide borrowers has led to millions falling further behind on settling the debts they took out to get a higher education.

Over 8 million people use IDR plans who may now benefit from this action as well as the newly announced SAVE plan that could see outstanding federal student loan debt discharged after as little as 10 years.