$39 Billion in Federal Student Loan Forgiveness Announced for 800,000 Borrowers; Here’s What You Need to Know

The Department of Education disclosed Friday that it will automatically forgive student loans for more than 800,000 borrowers. The loan forgiveness is expected to amount to a staggering $39 billion dollars in federal student loan relief.

The Education Department discovered that certain qualifying payments that should have contributed to borrowers’ progress toward loan forgiveness were not properly accounted for. (Photo: Timothy King Cade)

Student Loan Forgiveness Announced for 800,000 Borrowers

According to NBC News, this loan forgiveness action comes as a result of a “fix” to income-driven repayment plans, addressing administrative issues within the system.

Under income-driven repayment plans, federal student loan borrowers become eligible for loan forgiveness after making payments for either 20 or 25 years, depending on the specific plan.

However, the Education Department discovered that certain qualifying payments that should have contributed to borrowers’ progress toward loan forgiveness were not properly accounted for.

Education Secretary Miguel Cardona emphasized the significance of this development, stating, “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness… by fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve.”

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Biden’s Initiative: Loan Forgiveness

According to Fox26, this loan forgiveness initiative comes after the Supreme Court struck down President Joe Biden’s proposal to forgive up to $20,000 in debt for 43 million federal student loan borrowers in a 6-3 ruling last month.

The Supreme Court‘s decision dealt a blow to one of President Biden’s key campaign promises, prompting his administration to explore alternative avenues for relief.

President Biden has directed the Education Department to develop a new plan for loan forgiveness that aligns with the Higher Education Act. He has assured the public that this proposal will be “legally sound” but cautioned that it will take time to formulate. At present, the specifics of the new plan have not been announced.

By rectifying the administrative issues in income-driven repayment plans, the Department of Education aims to provide $39 billion in federal student loan forgiveness, thereby easing the burden on hundreds of thousands of borrowers.

READ ALSO: New Student Debt Relief Plan To Cancel $39 Billion After Supreme Court Blocks Original Program