Biden Administration Announces Student Debt Relief for 804,000 Borrowers
In a significant move, the Biden administration has revealed plans to wipe away the student debt of 804,000 borrowers. This amounts to a total debt relief of $39 billion. The announcement comes as the administration aims to fix the existing income-driven repayment plans and accurately count qualified monthly payments.
Education Secretary Miguel Cardona emphasized the importance of rectifying the broken system that has failed to accurately track borrowers’ progress towards forgiveness. He stated, “For far too long, borrowers fell through the cracks…we are ensuring everyone gets the forgiveness they deserve.”
The income-driven repayment plans available to federal student loan borrowers determine payments based on income and family size, disregarding the total debt owed. After 20 or 25 years of payments, borrowers reach a forgiveness threshold, and the remaining balance is then eliminated.
This action addresses past administrative failures and errors that miscounted qualifying payments. The Department of Education acknowledged the historical shortcomings and committed to resolving them. Borrowers affected include those with Direct Loans or Federal Family Education Loans held by the department.
With student loan repayments set to resume in October following the pandemic pause, this announcement aligns with President Joe Biden’s promise to provide debt relief to millions of Americans. During Biden’s tenure, his administration has already canceled more student debt than any previous president, with a total of $116.6 billion in relief approved for over 3.4 million borrowers.
Despite the recent Supreme Court ruling against Biden’s loan forgiveness program, the administration continues to explore alternative solutions to ease the burden on borrowers. Biden remains committed to finding a “new path” forward on debt relief and reassured borrowers that he will fight for their cause.
In addition to these efforts, the Department of Education plans to introduce a new income-driven repayment plan, known as the SAVE (Saving on a Valuable Education) plan. Some aspects of this plan will be implemented this summer, with full implementation expected next year. Once implemented, borrowers will experience a significant reduction in monthly bills, and remaining debt will be canceled after at least 10 years of payments.
This comprehensive approach by the Biden administration aims to alleviate the student debt crisis and provide much-needed relief to borrowers.
This content is created and written by Sam Fossum, CNN.
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