Originally published July 14, 2023 6:38 am PDT
In defiance of a recent Supreme Court decision, the Biden administration on Friday pledged to aid 804,000 student loan borrowers, promising a total of $39 billion in student debt relief.
This announcement follows the Supreme Court’s rejection of President Biden’s student loan forgiveness proposal last month.
In an initiative led by the Education Department, the debt relief will be facilitated through income-driven repayment plans.
These plans allow the federal government to erase outstanding loan balances for borrowers who have fulfilled their payment obligations for 20 to 25 years.
The department has committed to improving the accuracy of qualified monthly payment tracking and will soon reach out to eligible borrowers to inform them about the relief.
Biden’s earlier student debt relief plan, which proposed $10,000 debt relief for low-to-middle-income borrowers and $20,000 for Pell Grant recipients, was deemed unconstitutional by the Supreme Court in a 6-3 ruling.
The court ruled that the power to forgive debts amounting to hundreds of billions of dollars had not been explicitly vested in the president by Congress.
Apparently unfazed by the court’s ruling, Biden vowed to continue his efforts to relieve student debt.
His updated plan is grounded in the Higher Education Act, which some advocates interpret as giving the education secretary the authority to “compromise, waive or release” student loan debt, according to The Hill.
Before the new plan can take effect, it must undergo a public review period, which could delay its execution.
U.S. Secretary of Education Miguel Cardona stated, “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,”
He continued, “Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers. By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans. This Administration will not stop fighting to level the playing field in higher education.”
The debt relief is an extension of a previous adjustment made by the administration in April 2022.
According to an official press release from the Department of Education, the beneficiaries of this relief initiative are borrowers with Direct Loans or Federal Family Education Loans held by the Department.
This includes Parent PLUS loans of either type.
The borrowers eligible for relief are those who have met the necessary forgiveness threshold under the following circumstances:
- Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the type of loan, or the repayment plan;
- Any period in which a borrower spent 12 or more consecutive months in forbearance;
- Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance;
- Any month spent in deferment (except for in-school deferment) prior to 2013; and
- Any month spent in economic hardship or military deferments on or after January 1, 2013.
