Biden Administration to Wipe Out $39 Billion in Student Loans
Decision comes after the Supreme Court blocked a plan to forgive $430 billion in debt The student loans affected by the Education Department’s decision will be automatically discharged in the coming weeks. Photo: Bing Guan/Bloomberg News By Harriet Torry Updated July 14, 2023 10:52 am ET The Education Department said Friday that it will forgive $39 billion in federal student loans for more than 804,000 borrowers. The discharges are a result of fixes implemented by the Biden administration to ensure borrowers have an accurate count of monthly payments that qualify toward forgiveness under income-driven repayment plans, the department said. The affected loans will be automatically discharged in the coming weeks. Friday’s move is implementing previously announced plans. Those actions
The student loans affected by the Education Department’s decision will be automatically discharged in the coming weeks.
Photo: Bing Guan/Bloomberg News
The Education Department said Friday that it will forgive $39 billion in federal student loans for more than 804,000 borrowers.
The discharges are a result of fixes implemented by the Biden administration to ensure borrowers have an accurate count of monthly payments that qualify toward forgiveness under income-driven repayment plans, the department said. The affected loans will be automatically discharged in the coming weeks.
Friday’s move is implementing previously announced plans. Those actions are separate from the more high-profile policy that the Supreme Court rejected in late June. The court threw out the Biden administration’s plan to forgive student loans held by 40 million Americans, ending a $430 billion program.
An income-driven repayment plan calculates monthly student loan payments based on income and family size. Inaccurate payment counts resulted in borrowers losing progress toward loan forgiveness, the department said.
Income-driven repayment plans were designed to help lower earners borrow for college, but few have been able to use them effectively because of technical problems and onerous amounts of income-verification paperwork.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Education Secretary Miguel Cardona said in a statement.
Updates to follow as news develops
The Supreme Court overturned President Biden’s student-debt forgiveness plan, claiming it exceeded the authority Congress delegated to the executive branch. WSJ’s Andrew Restuccia explains what the decision means for borrowers. Photo illustration: Elise Dean
Write to Harriet Torry at [email protected]
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