- Department of Education announced a ‘fix’ in how repayments are calculated
- Borrowers who have been paying for more than 20 years will have debts wiped
- Comes two weeks after the Supreme Court struck down his federal bailout
President Joe Biden will forgive $39 billion in student debt for 804,000 Americans – two weeks after the Supreme Court struck down his $430 billion relief plan because it was unconstitutional.
Borrowers who have been making payments for between 20 and 25 years will have their debts wiped due to fixes in the system that calculates repayment plans.
‘For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,’ said Secretary of Education Miguel Cardona.
‘Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers.
The Supreme Court justices ruled in a 6-3 decision that the Education Secretary had no authority to wipe the debts of 20 million borrowers.
It followed fury from taxpayers who have never been to college and Republicans claiming middle-class Americans were funding a bailout for students.
Under Biden’s plan, those making less than $125,000 a year would have gotten $10,000 relief while Pell Grant recipients would have gotten $20,000 wiped.
The justices in the majority ruled that Biden should have gotten Congress’s approval first.
It sparked Biden to start plotting a new way to wipe the debts of millions of Americans and keep a promise he made during his presidential campaign.
‘By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who their colleges cheated, and borrowers with permanent disabilities, including veterans,’ Cardona added.
‘This Administration will not stop fighting to level the playing field in higher education’.
‘These fixes are part of the Department’s commitment to address historical failures in the administration of the Federal student loan program in which qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for,” the Department of Education guidance said.
‘Borrowers are eligible for forgiveness if they have accumulated the equivalent of either 20 or 25 years of qualifying months.’
Vice President Kamala Harris said: ‘President Joe Biden and I are committed to delivering relief to student loan debt borrowers to help them move forward with their lives – whether they want to start a family, buy a home, or become an entrepreneur.
‘Today, we are taking another historic step by forgiving $39 billion in student loan debt for 804,000 borrowers who have been paying down their debts for 20 years or more and should qualify for relief.
