Biden White House Cancels $39 Billion in Student Debt

The Biden administration has pushed forward with its plans for student debt relief, announcing that over 800,000 borrowers would have their loans canceled, in relief that totals up to $39 billion.

The announcement comes two weeks after the Supreme Court blocked President Biden’s student loan forgiveness efforts, which would have given debt relief to around 37 million borrowers. The President said in his plan B measures that they would use “every tool” to push forward with the debt relief plan.

How Does This Help Borrowers?

Today’s relief plan is an adjustment to the current income-driven repayment scheme. Under the existing plan, borrowers have their outstanding debt forgiven after they have made payments for 20 years or 25 years, depending on their original arrangement.

Following the Supreme Court decision, the Biden administration vowed to invoke the 1965 Higher Education Act (HEA) as the legal basis for its new plans. Under the previous system, payments that should have brought borrowers closer to being debt-free were being missed by “administrative failures,” the Education Department said.

“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.

The debt forgiveness plan will bring relief to many borrowers, who will be notified in the coming days, but it may not be the end of legal battles. The Supreme Court’s decision to block relief plans was welcomed by some who saw the risk of students taking on more debt, or colleges raising tuition fees.

However, Slate suggested that the HEA plan could be on a sounder legal footing as it is not tied to the pandemic-related Heroes Act, like the first relief effort. But, they also noted that the President will have to complete the new program by the end of 2025, to avoid a tax burden on debt relief.