The Supreme Court has rejected President Biden’s ambitious plan to eliminate student debt for millions of borrowers. However, the White House has now taken a more modest approach that will still cancel the remaining debt for around 800,000 borrowers, according to the Washington Post. This action will specifically benefit those who have been enrolled in income-directed repayment plans for at least 20 years. The Education Department has used its authority to rectify errors made by loan servicers who collected payments on behalf of the government over the years, as reported by the New York Times.
Education Secretary Miguel Cardona commented on the move, stating that borrowers have long been overlooked in a flawed system. An investigation by NPR in 2022 highlighted the issue. Borrowers in income-directed repayment plans are expected to make payments based on their income, making it easier for those who struggle with large monthly payments. The loans were originally intended to be forgiven after a minimum of 20 years of repayment, but NPR found that only 32 out of 4.4 million borrowers had their loans canceled under this program.
Overall, this action by the White House aims to address the shortcomings of the previous student loan system and provide relief to a significant number of borrowers.
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