Joe Biden’s administration will cancel $39bn in student debt for more than 804,000 borrowers, the education department said on Friday, describing the relief as the result of a “fix” to income-driven repayment (IDR) plans.
Borrowers will be eligible for forgiveness if they have made either 20 or 25 years of monthly IDR payments, the department said. The IDR program caps payment requirements for lower-income borrowers and forgives their remaining balance after a set number of years.
The department said the relief addresses what it described as “historical inaccuracies” in the count of payments that qualify toward forgiveness under IDR plans.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” the secretary of education, Miguel Cardona, said.
Biden has said he will pursue new measures to provide student loan relief to Americans after the US supreme court blocked his plan to cancel hundreds of billions of dollars in debt.
The education department launched a regulatory “rule-making” process to pursue his $430bn loan relief plan. That process is expected to take months.
Friday’s relatively smaller relief falls under a separate payment count adjustment program that the Biden administration announced in April last year, the department said.
In late June the court ruled against the Biden administration’s $430bn student debt forgiveness plan in a blow to up to 40 million borrowers in the US.
In a 6-3 decision, the conservative-leaning supermajority of justices ruled that the 2003 Heroes Act, passed in the aftermath of the September 11, 2001 terrorist attacks on the US, does not authorize Biden’s debt forgiveness plan.
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The law gave the secretary of education authority to make changes to any provision of applicable student aid program laws in the aftermath of the attacks.
The decision strikes down a major tenet of the Biden administration’s program, with the 2024 election quickly approaching.
