Starting Monday, hundreds of thousands of federal student loan borrowers will receive emails from their loan servicers with the subject line “Your student loans have been forgiven.” This announcement comes as part of the Biden administration’s efforts to cancel debt for 804,000 borrowers who qualify for relief under their repayment plans but have not yet received it due to administrative failures.
The emails were set to start going out on Monday, and it is expected that over 800,000 borrowers will be notified of some relief in the coming weeks. Around 614,000 people are expected to have their entire student loan debts canceled, while others may still have remaining loans from different times.
The relief is specifically targeted at individuals who enrolled in income-driven repayment (IDR) plans, which allow student loan debts to be forgiven by the federal government after making payments for 20 or 25 years, depending on the plan. However, due to errors in tracking payments, many borrowers enrolled in IDR plans have been left paying beyond their payment end dates without any forgiveness.
President Joe Biden, who has faced legal setbacks and conservative criticism in pursuing broader student loan cancellation, sees this as a step toward fixing the broken student loan system. He stated, “Over 804,000 borrowers never got the credit they earned, and never saw the forgiveness they were promised – even after making payments for decades. I was determined to right this wrong.”
Education Secretary Miguel Cardona has also expressed support for the debt relief plan, stating that it corrects past administrative failures and stands up for borrowers who did everything right.
While the Department of Education is moving forward with the plan, there is the potential for lawsuits to interrupt the debt discharges. However, a recent suit filed by the New Civil Liberties Alliance challenging the Department of Education’s authority was dismissed by a U.S. district court judge in Michigan.
The debt relief announced by the Biden administration will result in $39 billion of automatic debt relief through the fixes to the IDR plans. Advocates for debt relief have praised this move as “delayed justice” for borrowers who have been repeatedly failed by the broken student loan system.
However, detractors like Republican Rep. Virginia Foxx have criticized the relief as an abuse of taxpayer money and an attempt to circumvent the Supreme Court. Foxx argues that the Biden administration is trampling the rule of law and hurting borrowers in pursuit of headlines.
This debt relief effort is part of a larger wave of changes to federal loan programs that were not fulfilling their promises. It includes forgiveness of $45 billion for people enrolled in Public Service Loan Forgiveness and $22 billion for borrowers defrauded by for-profit colleges.
Overall, the debt relief announced by the Biden administration totals $116.6 billion for more than 3.4 million borrowers. While a previous program to cancel student loan debt on a massive scale was rejected by the Supreme Court, the administration has announced a new IDR plan that will lower monthly payments and decrease the timeline for forgiveness.
The Department of Education is also in the process of attempting debt forgiveness through the Higher Education Act, although this is likely to face legal challenges as well.
How will the federal government determine eligibility for loan forgiveness under the income-driven repayment plans?
Starting next week, federal student loan borrowers will begin receiving emails from their loan servicers announcing the forgiveness of their loans. This move is part of the Biden administration’s ongoing efforts to cancel debt for more than 800,000 borrowers who qualify for relief but have not yet received it due to administrative failures.
The emails were scheduled to start going out on Monday, with over 800,000 borrowers expected to be notified of some form of relief in the coming weeks. Out of this group, approximately 614,000 individuals will have their entire student loan debts canceled, while others may still have remaining loans from different periods.
The relief is specifically aimed at individuals who have enrolled in income-driven repayment (IDR) plans. These plans allow for student loan debts to be forgiven by the federal government after making payments for a period of 20 or 25 years, depending on the specific plan. However, due to errors in tracking payments, many borrowers enrolled in IDR plans have ended up paying beyond their repayment end dates without receiving any forgiveness.
This announcement marks a significant step in President Joe Biden’s agenda to address the flaws in the student loan system. Despite facing legal setbacks and criticism from conservatives regarding broader student loan cancellation, President Biden sees this action as a necessary measure to correct the injustices within the system. In a statement, he emphasized his determination to rectify the situation, stating, “Over 804,000 borrowers never got the credit they earned, and never saw the forgiveness they were promised – even after making payments for decades. I was determined to right this wrong.”
The Education Secretary, who is set to play a crucial role in implementing these loan forgiveness measures, is yet to comment on the announcement.
