White House aims to erase $39 billion in student loan debt through Biden’s forgiveness plan.

The Biden Administration Announces $39 Billion in Student Debt Relief After Supreme Court Strikes Down Last Plan

The Biden administration has recently announced a new plan to relieve $39 billion in student loan debt, following the Supreme Court’s rejection of President Joe Biden’s initial student loan forgiveness plan. This updated plan aims to address past administrative failures and provide relief to eligible borrowers.

What is the Plan?

The plan focuses on rectifying calculation errors related to income-driven repayment plans for student loans. According to the Higher Education Act, borrowers with these eligible plans can have their loans forgiven after making 240 or 300 monthly payments. The Department of Education will now consider various factors, such as late or partial payments, consecutive months in forbearance, deferment prior to 2013, and economic hardship or military deferments after January 1, 2013, when calculating the number of qualifying payments.

These changes are expected to significantly increase the number of borrowers who meet the threshold for loan forgiveness.

Who is Eligible?

Eligible borrowers are those who have been making the required 240 or 300 monthly payments under a federal income-driven repayment plan and had months that were previously not counted. Secretary of Education Miguel Cardona emphasized the importance of rectifying past administrative failures and ensuring that all deserving borrowers receive the forgiveness they are entitled to.

The Department of Education will begin notifying eligible borrowers, including those with Direct Loans or Federal Family Education Loans held by the department, in the coming days. Once contacted, eligible borrowers will not need to take any further action, and their loan discharges will commence 30 days after notification.

How Many People are Affected?

An estimated 804,000 borrowers will receive notifications from the Department of Education, informing them that their debt will be forgiven in the near future.

How Does This Differ from Biden’s Previous Plan?

Biden’s original plan, unveiled in August 2022, aimed to cancel up to $20,000 in student loan debt for individuals with federal student loans. However, the Supreme Court invalidated this plan, which would have applied to all federal borrowers. The new plan focuses on rectifying past administrative failures and providing relief to specific groups of borrowers.

President Biden remains committed to addressing the issue of student debt and fulfilling his campaign promises to alleviate the burden for millions of borrowers.

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