More than 800,000 borrowers will have $39 billion in federal student loan debt eliminated, the Biden administration announced Friday.
The act is the result of fixes to the federal student loan system’s income-driven repayment plans, which cancel certain borrowers’ debt if they make payments for 20 or 25 years.
“At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable,” Education Department Under Secretary James Kvaal said in a statement. “Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”
The relief comes as part of a government effort to remedy years of mistakes by the loan servicers that collect payments on the government’s behalf.
Millions of borrowers use income-driven repayment plans, but for decades, many of the companies that bill borrowers made extensive mistakes in tracking payments and in guiding borrowers through the payment process. Those errors put millions of borrowers further behind by years in their quest to pay off their loans.
Eligible borrowers will start to receive notification on Friday that they qualify for forgiveness, the Department of Education said in a statement.
“The Department will continue to identify and notify borrowers who reach the applicable forgiveness thresholds (240 or 300 qualifying monthly payments, depending on their repayment plan and type of loan) every two months until next year when all borrowers who are not yet eligible for forgiveness will have their payment counts updated,” the department said.
President Joe Biden has vowed to reduce student loan debt in the U.S., even after the Supreme Court last month blocked his forgiveness plan, which would have forgiven up to $20,000 in student loan debt for more than 40 million borrowers.
