On Friday, President Joe Biden proceeded to wipe away $39 billion in loans availed by students by using administrative fixes. The new changes will result in a better and more accurate counting of payments that qualify under the income-driven repayment plans that are currently in use. The Biden administration believes that these fixes address “historical failures” and will correct the administrative errors that affected 804,000 borrowers.
The plan announced on Friday cancels the remaining debt of borrowers after they have made payments for 20 or 25 years. The cancellation depends on certain factors such as the period when they borrowed the funds, and their loan as well as the type of plan under which they had borrowed the money.
In a long statement the Education Secretary Miguel Cardona noted that borrowers had not been able to accurately track their progress due to “cracks of a broken system.” The statement also said that the Biden administration would ensure that everyone got “the forgiveness they deserve” as they had done so “for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans.”
The Education Department will be notifying eligible borrowers in the near future about the cancellation of their remaining student debts.
Although the Supreme Court had struck down Biden’s loan forgiveness program that aimed to give millions of borrowers a one-time federal student debt relief, of up to $20,000, he had responded by saying that he and his administration would not stop fighting and would “use every tool at our disposal to get you the student relief you need” and more.
The Education Department is now formulating changes in the current federal loan system that will allow Americans to become part of a new plan that would be income-driven. A part of this plan is expected to begin this summer and will be finalized next year.
President Joe Biden has called this plan SAVE—Saving on a Valuable Education. It is similar to other plans that have been developed by the government. So, the plan will not face legal challenges in its implementation, unlike the earlier one-time federal student debt relief plan.
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