80,000 student-loan borrowers are getting $5 billion in debt cancellation they ‘rightfully earned’ through repayment plans, Biden’s Education Department says

U.S. President Joe Biden. Anna Moneymaker/Getty Images © Anna Moneymaker/Getty Images
  • The Education Department announced $5 billion in student-debt relief for 80,000 borrowers.
  • This is a result of fixes to the Public Service Loan Forgiveness waiver and income-driven repayment plans.
  • It comes as the department is also in the process of crafting a broader debt relief plan.

Thousands more student-loan borrowers will soon see their balances turn to zero.

On Wednesday, President Joe Biden’s Education Department announced it had approved 80,000 borrowers for nearly $5 billion in debt relief. Specifically, 46,000 of those borrowers are receiving $2.2 billion in relief due to the department’s one-time account adjustment for those on income-driven repayment plans who made the qualifying 20 or 25 years of payments, but have yet to see the relief they’re eligible for.

The other 34,400 borrowers included in the announcement are getting $2.6 billion in relief as a result of the limited Public Service Loan Forgiveness waiver that expanded relief options for public servants, along with ongoing fixes to the program.

“Before President Biden took office, it was virtually impossible for eligible borrowers to access the student debt relief they rightfully earned,” Education Secretary Miguel Cardona said in a statement.

“The data released today once again make clear that the Biden-Harris Administration’s relentless efforts to fix the broken student loan system are paying off in a big way, with more than 3.6 million borrowers now approved for nearly $132 billion in loan forgiveness,” he continued. “This level of debt relief is unparalleled and we have no intention of slowing down.”

A senior administration official told reporters on a Wednesday press call that the borrowers that were part of the latest announcement should see the relief in their accounts in the next few weeks. The department will continue evaluating the accounts of borrowers on income-driven repayment plans every other month until the spring.

This relief is part of the Education Department’s efforts to update the accounts of borrowers who have found administrative burdens, like paperwork errors, have kept them from getting the relief that programs like income-driven repayment and Public Service Loan Forgiveness promised them.

In August, the department announced 800,000 borrowers were getting $39 billion in debt relief as part of the first batch of the department’s account adjustments, later followed by $9 billion in relief for 125,000 borrowers in October.

The latest announcement also comes as borrowers are managing the return to federal student-loan repayment after an over three-year pause. To ease the transition, the department announced a new SAVE income-driven repayment plan intended to make monthly payments more affordable, along with a 12-month “on-ramp” period during which it won’t report any missed payments to credit agencies.

Given the unprecedented nature of the transition, servicers have struggled to manage the influx of questions from borrowers, leading to billing mistakes and strained customer service. The Education Department recently announced a framework to hold servicers accountable, including withholding their pay if they do not fulfill their obligations.

Still, even with the targeted debt relief, many borrowers are hoping for more expansive loan forgiveness. Next week, the department is holding its final round of negotiation sessions with stakeholders on its second attempt at student-debt relief using the Higher Education Act, and according to its latest draft text, four groups of borrowers could be eligible for up to $20,000 in relief through the plan.

Cardona said in a statement that this second attempt at relief “is about standing up for borrowers who’ve been failed by the country’s broken student loan system and creating new regulations that will reduce the burden of student debt in this country.”

Source: Business Insider