In a recent announcement, the Department of Education has revealed its decision to automatically forgive the student loans of more than 800,000 borrowers.
The move is aimed at tackling administrative issues within the income-driven repayment system. Eligibility for loan forgiveness will depend on the repayment plan for which federal student loan borrowers become eligible after paying for 20 or 25 years.
The Department views this action as a needed “reform” to income-driven repayment plans. It is estimated that federal student loan forgiveness will reach a total of $39 billion.
However, it’s important to note that the Supreme Court recently rejected President Joe Biden’s proposal to forgive up to $20,000 in debt for 43 million federal student loan borrowers. The court’s ruling, which came last month by a 6-3 majority, dealt a significant blow to one of Biden’s key campaign promises.
In response to this setback, President Biden has announced that he is directing the Department of Education to develop a new plan for loan forgiveness based on the Higher Education Act.
Although specific details of this plan have yet to be disclosed, it shows the administration’s commitment to addressing the issue of student loan debt and providing relief to borrowers.