The Education Department announced Friday it will be forgiving student loans for over 800,000 borrowers.
Expected to cost around $39 billion, the department has dubbed it a “fix” to income-driven repayment plans. Borrowers who have been paying back loans based on income years will be eligible for loan forgiveness after submitting payment over the course 20 to 25 years.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Education Secretary Miguel Cardona said in a statement. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve.”
The DOE said that the effort will fix "administrative failures" which have denied borrowers relief they are eligible for. Borrowers will be notified Friday of their eligibility, with relief beginning in the next 30 days.
"At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That's unacceptable," Department of Education Under Secretary James Kvaal said. "Today we are holding up the bargain we offered borrowers who have completed decades of repayment."
President Joe Biden had proposed a student loan forgiveness plan that would have allowed some borrowers up to $20,000 in relief. In a 6-3 ruling along party lines, Supreme Court justices denied forgiveness to 16 million Americans who had already been approved. Payments are now scheduled to resume in the Fall.
The President announced that his administration is working on a new plan to forgive student loan debt using the Higher Education Act of 1965, which can be used to establish federal aid programs — such as grants and loans — to help students pay for college.
In the meantime, Biden implemented a temporary 12-month "on-ramp repayment program," which will allow borrowers to defer student loan payments for up to a year without facing legal consequences or penalties from credit companies. The President has clarified that it "is not the same as the student loan pause," and that "if you can pay your monthly bills, you should."
