WASHINGTON (CN) — Weeks after the Supreme Court blocked one plan to forgive billions in student loans, President Joe Biden unveiled a new proposal Friday to cancel $39 billion of debt.
The Department of Education will notify more than 804,000 borrowers of relief through what it termed as "fixes" to the count of monthly payments made on income-driven 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,” Secretary of Education Miguel Cardona said in a press release. “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.”
Friday’s announcement applies to income-driven repayment plans, which make borrowers eligible for forgiveness after making 240 or 300 monthly payments, the equivalent of 20 or 25 years.
The system has faced previous criticism for poor communication, with the Education Department saying inaccurate counts have caused borrowers to lose progress toward forgiveness. A 2021 report estimated that, although 4.4 million borrowers had been repaying their loans for at least 20 years, only 32 had their debts canceled. In 2022, an NPR investigation also exposed myriad issues with the government’s accounting system.
“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 the release. "Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”
The plan comes weeks after the Supreme Court rejected the administration’s last proposal to forgive up to $20,000 in debt for tens of millions of borrowers who met certain income limits. After the decision, Biden pledged to find “a new way” to “deliver borrowers what they need.”
Student loan payments have been on hold since former President Donald Trump's education secretary, Betsy DeVos, paused payments in 2020 at the start of the Covid-19 pandemic. Payments are expected to restart later this year.
The Department of Education said the plan will bring the total amount of student loan forgiveness under the Biden administration to more than $116.6 billion for more than 3.4 million borrowers.
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