39 billion in student loan debt

Joe Biden has announced the forgiveness of $39 billion in student loan debt for 804,000 borrowers who are part of income-driven repayment plans. This relief is a result of corrections made by the government to these plans. The Department of Education will inform eligible borrowers enrolled in the program about the discharge of their loans in the coming weeks. It is worth noting that this announcement follows the US Supreme Court’s rejection of President Biden’s broader student loan forgiveness plan.

The administration’s actions aim to address administrative errors that prevented certain borrowers’ payments from counting towards their eligibility for student loan relief. According to US Secretary of Education Miguel Cardona, this move rectifies the failures of a flawed system that failed to accurately track borrowers’ progress towards forgiveness.

To qualify for forgiveness, borrowers must have made payments for 20 or 25 years, depending on their specific repayment plan. The US government provides various income-driven repayment plans, where borrowers make monthly payments based on their income over a period of 20 or 25 years.

In April 2022, the administration initially announced changes to the plan to address historical inaccuracies in payment counts that contribute towards forgiveness under income-driven repayment plans.

However, the US Supreme Court recently ruled 6-3 against President Biden’s broader student loan forgiveness plan, stating that the administration exceeded its authority. This plan aimed to cancel billions of dollars in student loans for over 40 million Americans, with forgiveness amounts of up to $10,000 per borrower and potentially up to $20,000 in specific cases.

Following the ruling, President Biden expressed his commitment to finding alternative ways to provide student loan forgiveness. He stated that although one path has been closed, they will seek other avenues to address the issue.

Since taking office, President Biden has taken several executive actions to provide student loan relief to smaller groups, such as canceling student loan debt for 200,000 borrowers who suffered harm or fraud from their universities.