WASHINGTON — The Department of Education announced Friday that it will automatically forgive student loans for more than 800,000 borrowers.
The action is the result of what the department calls a “fix” to income-based payment plans. It is expected to total $39 billion in federal student loan forgiveness.
The department said the measure will address administrative problems in the income-based pay system. Under the plans, federal student loan borrowers are eligible for forgiveness after 20 or 25 years of payments, depending on the plan. But for some, qualified payments that “should have moved borrowers closer to forgiveness,” the department said in a news release, were not accounted for.
The Supreme Court struck down President Joe Biden’s plan to forgive up to $20,000 in debt to 43 million federal student loan borrowers in a 6-3 ruling last month, dealing a blow to one of his key campaign promises.
Immediately after the ruling, Biden said his administration would explore other avenues for relief. “Today’s decision has closed a path. Now we are going to look for another one, ”he said.
Biden also said he was directing the Department of Education to formulate a new plan for loan forgiveness based on the Higher Education Act. He promised that the proposal would be “legally sound” and warned that it “will take more time.” Details of the new plan have yet to be announced.
Friday’s announcement is a smaller step the Biden administration is taking to seek federal student loan relief with existing authority.
“For too long, borrowers fell through the cracks of a broken system that failed to keep an accurate record of their progress toward forgiveness,” Education Secretary Miguel Cardona said in a statement. “By correcting past administrative failures, we make sure everyone gets the forgiveness they deserve.”
