The Biden administration has unveiled plans to forgive a staggering $9 billion in student debt, benefiting 125,000 borrowers. This announcement comes at a pivotal moment as student loan repayments resume after a hiatus of more than three years.
The decision to cancel this substantial amount of debt represents the latest effort from the White House to address the student loan crisis, particularly in the aftermath of the Supreme Court’s landmark ruling in June. In a 6-3 decision led by the court’s conservative majority, the administration’s ambitious proposal for broad-based student loan forgiveness was invalidated. This initiative had aimed to assist over 40 million borrowers in erasing up to $20,000 each in accumulated debt.
Following the setback of the invalidated debt forgiveness plan, the Biden administration has pivoted towards alternative strategies for alleviating the burden of student debt.
Among these initiatives is the introduction of a novel income-driven debt repayment (IDR) plan, alongside targeted debt forgiveness for eligible borrowers. Meanwhile, as millions of student borrowers resume their payments this month, reports are surfacing regarding issues with loan servicing, encompassing prolonged wait times for callers and inadequate customer service responses.
While the Biden administration is diligently working on a comprehensive student loan relief plan through the Higher Education Act, this process is expected to span at least a year and may encounter legal challenges along the way.
In the interim, the Department of Education has been proactively forgiving debt for specific categories of borrowers, including those enrolled in IDRs. U.S. Secretary of Education Miguel Cardona announced that the administration has greenlit a staggering $127 billion in debt relief for approximately 3.6 million borrowers, encompassing the latest round of forgiveness. These collective efforts underscore a concerted attempt to mend what Cardona refers to as a “broken student loan system.”