More than 800,000 student borrowers will have their loans automatically discharged within the next few weeks, the U.S. Department of Education announced Friday.
The Biden-Harris Administration is providing $39 billion in automatic loan forgiveness resulting from fixes to the income-driven repayment plan system.
“I have long said that college should be a ticket to the middle class – not a burden that weighs down on families for decades,” President Joe Biden said in a statement on Friday afternoon. “My Administration is delivering on that commitment.”
The new automatic discharges come two weeks after the Supreme Court blocked the president’s student loan forgiveness plan that would have provided borrowers with up to $20,000 in student debt relief.
“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. “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.”
Those fixes to the federal student loan program are a result of the Biden-Harris Administration’s implementation of an adjustment in payment counts it made last year. Under the Higher Education Act, borrowers are eligible for loan forgiveness if they have accumulated the equivalent of 20 or 25 years of qualifying monthly payments.
The 804,000 borrowers who will benefit from the payment count adjustments join 3.4 million others who have already seen their loans forgiven through a previous $116.6 billion in Biden-Harris Administration initiatives.
“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 a statement. “Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”
Borrowers who will benefit from the new round of automatic loan forgiveness include those with Education Department Direct Loans or Federal Family Education Loans who have reached the forgiveness threshold of payment credits. Those forgiveness periods include:
- Any month in which a borrower was in a repayment status regardless of whether payments were partial or late, the type of loan or the repayment plan;
- Any period in which a borrower spent 12 or more consecutive months in forbearance;
- Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance;
- Any month spent in deferment (except for in-school deferment) prior to 2013; and
- Any month spent in economic hardship or military deferments on or after January 1, 2013.
The department will begin notifying borrowers of their loan forgiveness starting Friday, with discharges of their loans beginning 30 days after they are informed.
“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,” Biden said, pledging: “But we’re not stopping there.”
“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,” he continued. “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.”
“Republican lawmakers – who had no problem with the government forgiving millions of dollars of their own business loans – have tried everything they can to stop me from providing relief to hardworking Americans,” the president added. “Some are even objecting to the actions we announced today, which follows through on relief borrowers were promised, but never given, even when they had been making payments for decades. The hypocrisy is stunning, and the disregard for working and middle-class families is outrageous.”
