Biden announces student loan forgiveness of $39 billion for 800,000 borrowers

The Biden administration announced on Friday that more than 800,000 borrowers with $39 billion in federal student loans would have their debt forgiven after months of protests from students and government officials.

The Department of Education announced that it will start informing borrowers about the impending automatic discharge of their debt starting today.

The debt relief comes two weeks after the Supreme Court rejected the Biden administration's plan for widespread student loan forgiveness, which would have allowed more than 40 million borrowers to each get up to $20,000 in debt forgiven.

The Biden administration is also working to improve income-driven repayment plans (IDRs), which are meant to lower monthly student loan payments by tying a person's payment amount to their income. This plan, which was announced on Friday, is connected to that effort.

The Biden administration announced debt discharge for 804,000 individuals who had enrolled in IDRs with 20–25 years of qualifying payments, CBS News reported.

The management of IDRs, according to the administration, had "historical failures," which is why it is now cancelling the loans.

The administration claimed in a statement that some "qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for."

"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 US Secretary of Education Miguel Cardona in the statement.

The Higher Education Act and Education Department regulations allow borrowers to receive forgiveness after making 240 or 300 monthly payments in an IDR plan or standard repayment plan.

The number of months depends on the borrower's initial loan type and enrollment. However, inaccurate payment counts led to some borrowers not progressing towards loan forgiveness. The borrowers of Direct Loans, Federal Family Education Loans, and Parent PLUS loans are covered.