The Biden Education Department has made a surprising announcement that it will automatically forgive student loans for hundreds of thousands of borrowers, despite a recent Supreme Court ruling that struck down another student loan scheme. This decision comes just two weeks after the Supreme Court rejected President Biden’s program to cancel debt relief.
According to ABC News, the Education Department revealed that it is forgiving the debts of 804,000 borrowers as a way to address what they consider “administration failures.” These borrowers have been making payments on their loans through income-driven repayment plans, which allow for debt forgiveness after 20 or 25 years of repayment.
Education Secretary Miguel Cardona emphasized that these borrowers deserve the forgiveness they have been granted. He stated that the previous broken system failed to accurately track their progress towards forgiveness, leaving them caught in its cracks. The Department aims to fix these past administrative failures and ensure that everyone receives the forgiveness they deserve, similar to what has been done for public servants, students cheated by colleges, and borrowers with permanent disabilities.
However, this forgiveness comes at a significant cost to taxpayers. The Department of Education estimates that fixing these past administrative failures will total $39 billion. This substantial sum highlights the extent of the mistakes made in the previous system.
The 804,000 borrowers will be notified by the Department of Education, and relief will begin 30 days later. Those who prefer not to have their debts discharged can contact their loan service providers to make arrangements.
This latest plan is part of a series of efforts by the Biden administration to rectify programs that were failing borrowers. In addition to the forgiveness for income-driven repayment plan participants, $45 billion has been allocated to people enrolled in Public Service Loan Forgiveness who were not receiving the debt relief they were promised. Furthermore, $22 billion has been set aside for borrowers who were defrauded by for-profit colleges. These measures aim to address the struggles faced by borrowers and provide them with the support they need.
It is worth noting that this move by the Education Department is audacious considering the Supreme Court’s rejection of Biden’s previous debt relief program. In June, the Court ruled against a plan that would have cancelled $10,000 in loans for most student borrowers and $20,000 for Pell Grant recipients. The fate of Biden’s newest student loan debt relief scheme, therefore, remains uncertain, as it is yet to be seen whether it will be challenged in the court system.
In conclusion, the Biden Education Department has taken a bold step in automatically forgiving student loans for hundreds of thousands of borrowers to address past administrative failures. While this move signifies a commitment to rectify the broken system, it comes at a significant cost to taxpayers. The Department aims to ensure that borrowers receive the forgiveness they deserve, in line with previous efforts to support public servants, students victimized by colleges, and borrowers with disabilities. However, the Supreme Court’s previous ruling against Biden’s debt relief program raises doubts about the potential challenges that may arise for this latest scheme.