• Over 800,000 borrowers with federal student loans worth $39 billion to receive debt forgiveness.
• Department of Education to notify borrowers about automatic discharge of their debt.
• Biden administration unveils plan to enhance income-driven repayment plans (IDRs).

After widespread student and government protests, the Biden administration made an announcement on Friday stating that over 800,000 borrowers holding federal student loans worth $39 billion would receive debt forgiveness.

The Department of Education will commence the process of notifying borrowers about the automatic discharge of their debt starting today. The Supreme Court recently rejected the administration’s proposal for broad student loan forgiveness, which aimed to provide up to $20,000 in debt relief to each of the 40 million borrowers. As a result, a debt relief program has been implemented as an alternative measure.

The Biden administration has unveiled a plan to improve income-driven repayment plans (IDRs) for student loans. These plans aim to lower monthly loan payments based on the borrower’s income.

As part of this initiative, the administration announced on Friday that debt forgiveness would be provided to approximately 804,000 individuals who had enrolled in IDRs and made qualifying payments for 20 to 25 years. The decision to cancel these loans comes as the administration acknowledges historical failures in the management of IDRs.

The statement from the administration highlighted that certain qualifying payments made under IDR plans were not properly accounted for, preventing borrowers from progressing towards loan forgiveness.

“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 US Secretary of Education Miguel Cardona in the statement.

Under the provisions of the Higher Education Act and Education Department regulations, borrowers can be eligible for loan forgiveness after making either 240 or 300 monthly payments, depending on their initial loan type and enrollment, through an income-driven repayment (IDR) plan or standard repayment plan.

However, due to inaccurate payment counts, some borrowers were unable to make progress towards loan forgiveness. This applies to borrowers with Direct Loans, Federal Family Education Loans, and Parent PLUS loans.