The Biden administration on Friday promised to eliminate more than $39 billion in student loans within 30 days.
More than 800,000 borrowers will be eligible under an income-driven plan announced on July 14. The program will be implemented in phases and will save the “typical borrower” about $1,000 per year and, in some cases, eliminate all debt.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Secretary of Education Miguel Cardona said in a written statement.
“By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans,” Cardona said.
The Supreme Court struck down President Joe Biden’s student loan forgiveness plan last month. It would have eliminated $400 billion in student loans.
In the ruling, a 6-3 decision, the Supreme Court found that Biden and the Department of Education overstepped their bounds in eliminating debt. Federal law does not allow the Biden administration, by executive order, to erase student loan debt. The ruling said the initiative would need to go through the legislative process.
After the Supreme Court decision, Biden said he would take additional actions to provide student debt relief.
The Government Accountability Office (GAO) reported in 2022 that the Department of Education has had trouble tracking borrowers’ payments.
“[It] hasn’t done enough to ensure that all eligible borrowers receive the forgiveness to which they are entitled,” the GAO wrote. “We found thousands of borrowers still in repayment who could be eligible for forgiveness now.”
Qualifying borrowers will be notified by the Department of Education, and relief will begin in about a month, the department said. Those who want relief should contact their loan servicers.
“At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable,” Under Secretary of Education James Kvaal said in a statement on Friday.
“Today, we are holding up the bargain we offered borrowers who have completed decades of repayment,” Kvaal said.