Biden cancels $39 billion of student loan debt

July 15, 2023
Robert Ayers

President Joe Biden just announced that the federal government is going to "forgive" $39 billion worth of federal student loan debt. 

Biden made the announcement via a press release that was published on Friday by the U.S. Department of Education (DOE).

This comes after the justices of the U.S. Supreme Court recently struck down Biden's student loan handout - the one that would have canceled $10,000 in federal student loan debt per borrower or up to $20,000 if the borrower was a Pell Grant recipient.

The justices, in that decision, ruled that Biden does not have the power, as president, to unilaterally cancel federal student loan debt via executive action, which is what Biden attempted to do.

The details

Now, the Biden administration appears to be attempting to circumvent the Supreme Court's ruling.

The DOE press release states:

The Department of Education (Department) today will begin notifying more than 804,000 borrowers that they have a total of $39 billion in Federal student loans that will be automatically discharged in the coming weeks. In total, the Biden-Harris Administration has approved more than $116.6 billion in student loan forgiveness for more than 3.4 million borrowers.

The press release goes on to explain how it is that the Biden administration is going to attempt to pull this off.

It states:

The forthcoming discharges are a result of fixes implemented by the Biden-Harris Administration to ensure all borrowers have an accurate count of the number of monthly payments that qualify toward forgiveness under income-driven repayment (IDR) plans. These fixes are part of the Department’s commitment to address historical failures in the administration of the Federal student loan program in which qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for.

By "historical failures," the DOE is referring to "inaccurate payment counts" as well as to "practices by loan servicers that put borrowers into forbearance in violation of Department rules."

A workaround?

The DOE's press release states:

[A] borrower is eligible for forgiveness after making 240 or 300 monthly payments—the equivalent of 20 or 25 years on an IDR plan or the standard repayment plan, with the number of required payments varying based upon when a borrower first took out the loans, the type of loans they borrowed, and the IDR payment plan in which the borrower is enrolled.

Borrowers who qualify are expected to receive a notification from the DOE in the coming days.

Many Republicans are criticizing the forgiveness plan as an attempt to circumvent the Supreme Court's decision.

At the time of this writing, it is unclear whether this plan will be legally challenged in the same manner as Biden's previous student loan handout.

“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress toward forgiveness,” Education Secretary Miguel Cardona said. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve.”

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