In a notable move, the Biden administration has announced its plans to wipe away a hefty $39 billion in federal student loans, set to benefit over 800,000 borrowers. This was revealed by the Department of Education in a recent press statement.
The rationale behind this massive forgiveness of student loans stems from the ‘fixes’ the Biden administration has put in place to provide an accurate count of monthly payments made by borrowers, qualifying for forgiveness under income-driven repayment (IDR) plans. IDR plans to offer an approach to managing student loan debt by adjusting the monthly payments to accommodate the borrower’s income and family size. After making a set number of monthly payments – 20 or 25 years’ worth, depending on the plan – borrowers become eligible for loan forgiveness. The department has announced that in the upcoming weeks, 804,000 borrowers will be notified of their loan forgiveness.
Secretary of Education Miguel Cardona commented on the situation, labeling it as the redressal of a “broken system.” According to Cardona, the systemic errors of the past administration had led to numerous borrowers slipping through the cracks, failing to gain an accurate record of their progress toward loan forgiveness.
The administration’s announcement comes after a significant roadblock in June when the Supreme Court ruled against Biden’s broader plan to cancel $400 billion in student loans, stating it was an overreach of the powers granted by the Constitution. Unfazed by the setback, Biden reiterated his commitment to providing relief to hard-working middle-class families.
The administration has now turned to the Higher Education Act, signed by President Lyndon B. Johnson in 1965, which grants the education secretary the power to “compromise, waive or release” student loans.
Vice President Kamala Harris stated that the administration’s mission to provide relief to student loan borrowers extends beyond the $39 billion forgiveness. She asserted that their aim is to enable Americans to access quality post-secondary education without being burdened by unmanageable student loan debt.
While some celebrate the move as an alleviation of financial pressure for many Americans, critics worry about the long-term economic impact and fairness of widespread student loan forgiveness, sparking an important discussion about the future of higher education financing in America.
