Biden Gov. Forgives $39 Billion in Student Loans for More Than 800,000 Borrowers

On Friday, the Biden administration ramped up its initiatives on the issue of student loans, revealing that more than 800,000 borrowers will have debt forgiveness, giving them $39 billion in aid.

The reason for this relief is the result of improvements to income-driven repayment plans in the student loan system. Under these plans, after making payments for 20 years or 25 years, the government cancels any outstanding loan, depending on the type of loan, the date of their loan, and their repayment plan.

Main Points

• 800,000 borrowers will have their loans forgiven, providing them with $39 billion in aid.
• The government cancels any outstanding loans based on the type of loan, the date of their loan and their repayment plan.
• This will provide debt relief to about 37 million borrowers.

With this announcement, the Supreme Court has blocked President Biden's efforts to forgive student loans, which will lead to debt relief for about 37 million borrowers. The president has said in his Plan B that he will use "Every Means Possible" to pursue the debt relief plan.

The Biden administration has pledged to make the Higher Education Act (HEA) of 1965 the legal basis for its new plans, following a Supreme Court order. The Ministry of Education has said that the earlier system, which entitled borrowers to become debt-free, was not fulfilled due to "administrative failures".

“For too long, borrowers have been trapped in the gaps of a poor system that has failed to accurately account for their steps toward forgiveness,” US Education Secretary Miguel Cardona said in a press release.

The borrowers benefit from this relief scheme in a few ways:

• This simplifies and automates the process of waiving off their loan, so that they do not have to worry about the repayment tenure, loan nature, and other complicated issues.

• It also reduces the time limit for waiving off their loan, so that they can get freedom in 10 years or 15 years instead of 20 years or 25 years.

• This reduces the tax charge on their forgiven loan, so that they don't have to pay any additional tax on getting the waiver.

“And that's just the tip of the iceberg,” Yu said in a press release. “Working people have suffered extra because of a bad student loan system.”

The announcement follows the Supreme Court invalidating President Biden's effort to forgive sweeping student loans that would have freed some 37 million people.

Frequently Asked Questions

Who gets the 39 billion in student loan forgiveness?

The Biden administration ramped up its initiatives on the issue of student loans, revealing that more than 800,000 borrowers will have debt forgiveness, giving them $39 billion in aid.

Can We Forgive All Student Loans?

In some circumstances, you may be able to get some or all of your debt forgiven or be able to pay them off. Although the terms student loan discharge or cancellation and loan forgiveness are often used interchangeably, they are actually quite different from each other.

Is Biden paying off student loans?

The US Supreme Court declared Biden's $441 billion federal student loan forgiveness plan unconstitutional on June 30, the last day of the court's 2022-23 session. This means there is no Biden student loan forgiveness program in place right now, and millions of borrowers will have to make monthly student loan payments again starting in October.