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Biden’s latest student debt move will bring 3.6 million borrowers closer to loan forgiveness

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The Department of Education is making more changes to the federal student loan system that will help bring millions of borrowers — some of whom may have previously been in forbearance –closer to receiving debt forgiveness.

These new actions, announced Tuesday, are the latest moves by the Biden administration to make it easier for federal student loan borrowers to receive forgiveness that they may already be entitled to under existing programs.

According to CNN, by the end of March, more than 700,000 of the 43 million federal student loan borrowers had seen their outstanding debt discharged under President Joe Biden, totaling more than $17 billion in relief. He recently extended a pandemic-related payment pause for federal student loans until August 31.

Tuesday’s actions will bring more than 3.6 million borrowers at least three years closer to receiving forgiveness through what’s known as the income-driven repayment program, or IDR. The program, which offers four types of repayment plans, allows borrowers to avoid loan default by lowering their monthly payments based on their income and family size.

IDR also promises loan forgiveness after 20-25 years of payments are made. Several thousands ofborrowers will immediately see forgiveness through the IDR program after Tuesday’s actions are fully implemented, according to the Department of Education.

Another 40,000 borrowers will receive immediate forgiveness through the Public Service Loan Forgiveness program because they will get credit for more of their payments.

“Student loans were never meant to be a life sentence, but it’s certainly felt that way for borrowers locked out of debt relief they’re eligible for,” said US Secretary of Education Miguel Cardona in a statement.

“Today, the Department of Education will begin to remedy years of administrative failures that effectively denied the promise of loan forgiveness to certain borrowers enrolled in IDR plans,” he added.

Democratic senators Elizabeth Warren of Massachusetts, Sherrod Brown of Ohio and Dick Durbin of Illinois called on the Department of Education last week to investigate mismanagement of theIDR program and to provide borrowers with debt relief. The lawmakers’ letter cited a recent report from NPR that found that very few borrowers were able to get the loan forgiveness they were promised by the IDR program.

Biden has resisted pressure from other Democrats to grant broad student loan forgiveness. Instead, his administration has taken several actions to make loan cancellation easier under existing programs.

Last year, the administration temporarily expanded eligibility for the Public Service Loan Forgiveness program until October 31, 2022. So far, the Department of Education has identified more than 113,000 borrowers with about $6.8 billion in loans who are eligible for student debt cancellation due to the waiver.

The department has also been chipping away at a backlog of forgiveness claims filed under a policy known as borrower defense to repayment that allows former students who were defrauded by their colleges to seek federal debt relief. Under that policy, the Biden administration has canceled about $2 billion in debt held by more than 105,000 individuals who attended for-profit colleges and another $1.2 billion for borrowers who attended ITT Technical Institutes before it closed.

The department also improved efforts to reach borrowers eligible for debt relief because of permanent disabilities, canceling $7.8 billion for more than 400,000 borrowers.

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SourceCNN
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