Biden administration to forgive $4.9 billion in student debt for 73,600 borrowers

Personal finance

US President Joe Biden speaks at Abbotts Creek Community Center during an event to promote his economic agenda in Raleigh, North Carolina, on January 18, 2024. 
Saul Loeb | AFP | Getty Images

The Biden administration announced on Friday that it would forgive $4.9 billion in student debt for 73,600 borrowers.

The relief is a result of the U.S. Department of Education’s fixes to its income-driven repayment plans and Public Service Loan Forgiveness Program.

“The Biden-Harris Administration has worked relentlessly to fix our country’s broken student loan system and address the needless hurdles and administrative inaccuracies that, in the past, kept borrowers from getting the student debt forgiveness they deserved,” U.S. Secretary of Education Miguel Cardona said in a statement.

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Around $1.7 billion of the aid will go to 29,700 borrowers enrolled in income-driven repayment plans. Those plans are supposed to lead to debt forgiveness after a set period, but historically, this hasn’t always happened because loan servicers failed to keep track of borrowers’ payments, experts say.

In addition, 43,900 borrowers who have worked in public service for a decade or more will receive $3.2 billion in loan cancellation, the U.S. Department of Education said. Borrowers in the Public Service Loan Forgiveness program have also struggled to get the debt erasure they’ve been promised due to errors in their payment counts and other issues.

The announcement did not specify when eligible borrowers may expect to see that relief.

The Biden administration has now cancelled more than $136 billion in student debt for more than 3.7 million Americans.

Consumer advocates have praised President Joe Biden for his recent actions but are pressuring him to do more.

On the campaign trail ahead of the 2020 presidential election, Biden vowed to cancel at least $10,000 of student debt per person.

“Student debt cancellation tipped the balance in Democrats’ favor in the midterms,” said Astra Taylor, co-founder of the Debt Collective, a union for debtors, in an interview last fall with CNBC. “Failing to deliver will demoralize and demobilize young people whose votes they cannot afford to lose.”

Biden’s plans to cancel up to $400 billion in student debt for tens of millions of Americans were thwarted last June at the Supreme Court. The high court said the president didn’t have the authority to instruct his Education secretary to cancel such a large amount of consumer debt without prior authorization from Congress.

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