U.S. Department of Education Announces $39 Billion Student Loan Discharge, Relief for 804,000 Borrowers The $39 billion is just a fraction of the over $116.6 billion in student loan forgiveness the Biden administration approved.
Key Takeaways
- Borrowers who have accumulated 20 or 25 years of qualifying monthly payments will be eligible for loan forgiveness.
- The Department of Education will notify borrowers every two months until all borrowers have their payment counts updated.
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On Friday, the U.S. Department of Education announced $39 billion in outstanding student loans will be forgiven.
In the coming days, more than 804,000 individuals will receive a notification via email that their federal student loans will be automatically discharged. To be eligible for forgiveness, borrowers must have made the equivalent payments of either 20 or 25 years of qualifying months under an income-driven repayment (IDR) plan.
The 804,000 individuals are the first round of eligible borrowers who will be notified. Overall, the Biden administration has approved nearly $117 billion in student loan forgiveness for over 3.4 million borrowers, the Department of Education added, and it plans to continue identifying and notifying borrowers who reach the forgiveness thresholds every two months until next year.
Borrowers will have the option to opt out for any reason.
Last month, Biden faced a setback to his administration's large-scale student loan forgiveness plan after the Supreme Court ruled that his debt relief plan was an unlawful overreach of executive power.
Related: Supreme Court Blocks Biden's Student Loan Forgiveness Plan — Here's How It May Affect the Economy
"At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That's unacceptable," Under Secretary James Kvaal said in the release. "Today we are holding up the bargain we offered borrowers who have completed decades of repayment."
The Department of Education stated that the move addresses "historical failures" in the student loan program. Essentially, some borrowers' payments weren't counted towards forgiveness, even though they were qualified through income-driven repayment (IDR) plans — meaning that they were working towards forgiveness for years, but weren't making any progress.
Now, the administration is helping borrowers know exactly how many monthly payments count towards loan forgiveness, as well as providing relief for borrowers who have been making payments for a long time. Many of the affected borrowers are likely to be 50 years or older, USA Today noted.
In total, the Biden administration has approved more than $116.6 billion in student loans for over 3.4 million borrowers. Chris J. Ratcliffe | Getty Images
"For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness," U.S. Secretary of Education Miguel Cardona said in a statement.
However, others are more critical of the decision. U.S. Representative Virginia Foxx said the move was an expense to taxpayers and an overreach of power.
"The Biden administration's blatantly political attempt to circumvent the Supreme Court is shameful," she said in a statement following the news. "The Biden administration is trampling the rule of law, hurting borrowers, and abusing taxpayers to chase headlines."
Related: FTC Cracks Down on Student Loan Schemes That Scammed Borrowers Out of $12 Million
