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Biden approves $5 billion in student loan forgiveness for 80,000 borrowers. Who meets the requirements?
The Department of Education has approved the forgiveness of an additional $4.8 billion in student loans for approximately 80,000 borrowers.
This is the most recent round of relief available to Americans who qualify for debt cancellation through programs such as income-driven repayment and Public Service Loan Forgiveness (PSLF).
According to the administration, about half of the forgiveness ($2.2 billion for 46,000 borrowers) comes as a result of “fixes” to the federal income-driven repayment process. The Department of Education states that historically, progress towards loan forgiveness hasn’t been accurately counted, resulting in unfair burdens for borrowers who have been making payments for over two decades.
Golden tickets: More than 804,000 borrowers who paid for decades can now experience student loan debt forgiveness.
The remaining forgiveness ($2.6 billion for over 34,000 borrowers) is for participants in the PSLF program, including those working in public sector jobs like teaching and public defense. These borrowers have had their repayment timelines reassessed in recent months.
The Biden administration initially announced in July that borrowers’ accounts would be adjusted to improve accuracy and provide immediate relief to almost a million borrowers. A Government Accountability Office report from last year revealed the need for the Department of Education to track borrowers’ payments more effectively. The department states that over 3.6 million borrowers in total are eligible to have at least three more years of payments counted towards their loan forgiveness. Eligible borrowers will be notified every other month until next year as part of the department’s plan.
“This debt relief is life-changing,” Education Secretary Miguel Cardona expressed during a call with reporters on Wednesday. He acknowledged that many more student loan borrowers require assistance and have been failed by the system.
Entering a Critical New Phase in Student Debt Relief
The Department of Education made this announcement as President Biden’s “Plan B” to bring student loan forgiveness to millions of Americans reaches a crucial stage.
Recently, the administration presented its latest proposal in an ongoing effort to produce new regulations that have a better chance of passing legal scrutiny after the Supreme Court rejected Biden’s first student loan relief plan in June. The proposal focuses on aiding long-term borrowers who have been repaying loans for over two decades and borrowers whose financial situations have been negatively impacted by interest.
The administration has suggested waiving up to $20,000 in debt for low- and moderate-income borrowers whose loan balances have surpassed the original amount borrowed. To qualify for this relief, single individuals must earn less than $125,000 annually and be enrolled in income-driven loan repayment plans. However, borrowers may still be eligible for relief up to $10,000 over their original loan amounts even if they do not meet these requirements.
Biden promised to forgive student loan debt on a large scale during his campaign. With that plan being challenged, the administration has shifted its focus to highlighting smaller rounds of forgiveness. Currently, the total forgiveness amount is $132 billion for millions of borrowers.
The Most Recent Student Debt Forgiveness Proposal: Biden’s plan aims to assist borrowers with old loans and significant interest.
The agency’s final round of policy negotiations will take place next week, and the discussion will primarily center around determining the types of “hardships” (such as chronic illness or bankruptcy) that could make borrowers eligible for special relief.