White House Announces Student Debt Forgiveness for 804,000 Federal Borrowers

WASHINGTON — The Biden administration said Friday that it would automatically forgive $39 billion in federal student loan debt for 804,000 borrowers, marking the White House’s latest effort to revive pieces of the student loan forgiveness plan struck down by the Supreme Court in June.

The proposal revolves around income-driven repayment plans administered by the Education Department. In some, the administration is canceling the remaining balances a borrower has after making repayments for 20 to 25 years, depending on when they borrowed, and their loan and plan type.

The administration said forgiving the debts was made possible by accounting fixes that ensure all past payments toward reducing the loans are accounted for.

“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” said U.S. Secretary of Education Miguel Cardona. 

The administration said borrowers should learn in the coming days whether they qualify for the program and their level of forgiveness.

Income-driven repayment plans generate monthly payment plans proportional to income and family size. Borrowers qualify once they have made payments equivalent to 240-300 monthly payments or 20-25 years. It forgives the remaining debt after the required number of payments have been paid. 

This plan is part of the payment count adjustments announced in April 2022. 

Forbes reported that more than half of today’s students leave school with debt, with the U.S. having “$1.75 trillion in total student loan debt (including federal and private loans).”

The 2023 report also said roughly 92% of student debt is in federal student loans.

The Biden-Harris administration has made student loan forgiveness an emphasis of policy.

In a statement released by Vice President Kamala Harris via Twitter on Friday, she reiterated the administration’s commitment. 

“Our administration will continue to fight to make sure all Americans can access high-quality postsecondary education without taking on the burden of unmanageable student loan debt,” the statement said.

Harris also shared that the administration is looking into providing student loan forgiveness through the Higher Education Act and a new “income-driven repayment plan” that would halve monthly payments for undergraduate students. 

However, not all of the administration’s plans have been successful. In June the Supreme Court struck down President Joe Biden’s student loan forgiveness plan, which would have relieved $10,000 from most borrowers and canceled all debt for about 45% of borrowers.

In a 6-3 split along ideological lines, the justices determined Biden did not have the power to broadly forgive student loan debt.  

But this plan will be the latest step to forgive student loan debt. 

“At the start of this administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable,” said Education Under Secretary James Kvaal. “Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”

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