Biden Admin Begins Student Loan Cancellation Process

Many borrowers of federal student loans got a surprise and welcome email earlier this week, when the Biden administration notified them that their loans were being forgiven.
ABC News reported that on Monday, hundreds of thousands of borrowers received an email from the companies that service their loans that had a subject line of: “Your student loans have been forgiven.”

The notices were part of the efforts by the Biden administration to try to cancel student loan debt for more than 800,000 borrowers. These borrowers already qualified for the relief as a result of their repayment plans, but they hadn’t yet received the relief because of “administrative failures,” according to White House officials.

In the next few weeks, officials have said they expect that the more than 800,000 borrowers who are eligible for the student loan relief will receive similar emails. The Department of Education said that they estimated more than 200,000 people already had their debt wiped out at the end of Monday.

In total, the Biden administration says that roughly 614,000 borrowers are going to have the entire balance on their student loans canceled. Others still may have some money that they owe, based on if they borrowed money for school for different reasons or at different times.

This new relief program targets student loan borrowers who enrolled in what’s known as an IDR, or income-driven repayment, plan. These plans provide an avenue for federal student loan balances to be forgiven after the borrower makes payments for at least 20 or 25 years.

The White House says that there have been many errors made in tracking these payments, though, which has caused many people who are enrolled in these IDR plans to continue paying beyond the end dates of their plans.

President Joe Biden had tried previously to pass a sweeping federal student loan forgiveness plan, but that was ultimately shot down by the Supreme Court. Once that ruling was handed down, he worked with his administration on this plan to give hundreds of thousands of student loan borrowers some relief.

This week, the president said the account adjustments that started to be made this week was just one step in a process of fixing the federal student loan system, which he said is broken.
In a statement, Biden said:

“Under these plans, if a borrower makes 20 or 25 years’ worth of payments, they get the remaining balances of their loans forgiven. But, because of errors and administrative failures of the student loan system that started long before I took office, over 804,000 borrowers never got the credit they earned, and never saw the forgiveness they were promised – even after making payments for decades.

“I was determined to right this wrong.”

Officials in the Biden administration said the relief distribution plan should be finished in just a few weeks.

Some lawsuits have been filed challenging this plan, so it’s possible that it might have to be put on hold – or prohibited altogether. That being said, some recent lawsuits were dismissed by a Michigan U.S. district court judge.