“The Biden administration recently announced the cancellation of $39 billion (£29.7 billion) in student loans, benefiting 804,000 borrowers who had outstanding debts for over 20 years.”
“The recent relief for student loan borrowers is attributed to the government’s implementation of necessary ‘fixes’ to the existing plans. The Department of Education has stated that eligible borrowers will receive notifications regarding the discharge of their loans in the upcoming weeks. This development follows the US Supreme Court’s rejection of President Joe Biden’s $400 billion student loan relief proposal.”
“Friday’s action aims to rectify administrative errors that resulted in some borrowers’ payments not being counted towards their eligibility for student loan relief, according to the Department of Education. US Secretary of Education Miguel Cardona stated that the move addresses the longstanding issue of borrowers being overlooked within a flawed system that failed to accurately track their progress towards loan forgiveness.
Officials clarified that borrowers become eligible for loan forgiveness after making payments for 20 or 25 years, depending on their specific repayment plan. However, the announcement faced criticism from some of President Biden’s political opponents. Representative Virginia Foxx, Chairwoman of the House Education and the Workforce Committee, accused the president of undermining the education financing system for political gain, while Representative Lisa McClain described the loan forgiveness scheme as “unconstitutional” and unfair to taxpayers who have diligently repaid their student loans.
The US government offers various income-driven repayment plans, known as IDR plans, where borrowers make monthly payments based on their income over a period of 20 or 25 years. In April 2022, the administration initially announced plans to address historical inaccuracies in the count of qualifying payments under IDR plans, as stated by the education department.
Last month, the US Supreme Court ruled 6-3 against President Biden’s larger proposal to cancel billions of dollars in student loans for over 40 million Americans. The court found the administration had exceeded its authority with the program, which aimed to forgive up to $10,000 per borrower and up to $20,000 in certain cases.”
“US Supreme Court Strikes Down Biden’s $430 Billion Student Loan Plan”
“After the announcement of the ruling, President Biden expressed his commitment to finding an alternative approach to offer student loan forgiveness. He stated, ‘Today’s decision has closed one path. Now we’re going to start another.’
Abby Shafroth, co-director of advocacy at the National Consumer Law Center and director of its Student Loan Borrower Assistance Project, released a statement applauding the decision and emphasizing that Congress has the authority to rectify the situation. She remarked, ‘This action is the result of overdue structural fixes in the student loan system that had prevented borrowers from receiving the relief they were legally promised.’
Since taking office, President Biden has implemented a series of executive actions to provide student loan relief to specific groups. For example, last year he forgave student loan debt for 200,000 borrowers who claimed to have been harmed or defrauded by their universities.”
Statement from Vice President Kamala Harris on Additional Student Loan Forgiveness
“President Joe Biden and our commitment to relieving student loan debt aim to empower borrowers to progress in their lives, whether it’s starting a family, purchasing a home, or pursuing entrepreneurship. Today, we take a significant stride by forgiving $39 billion in student loan debt for 804,000 borrowers who have diligently made payments for 20 years or more, qualifying them for relief. Unfortunately, many of these borrowers were subjected to forbearance by loan servicers, disregarding the established rules, while others were not appropriately credited for their monthly payments. Throughout my career, addressing these harmful practices and reducing student loan debt has been a top priority. As California Attorney General, I successfully secured $1 billion in restitution for defrauded veterans and students by challenging predatory for-profit colleges.
However, our efforts do not end here. Last month, President Biden announced our pursuit of an alternative approach to provide relief through the Higher Education Act, alongside the finalization of our new income-driven repayment plan. This plan will halve monthly payments for undergraduate loans. Our Administration remains dedicated to ensuring that Americans can access high-quality postsecondary education without bearing the burden of unmanageable student loan debt.”