President Joe Biden’s administration Friday announced a $39 billion student loan forgiveness program aimed at borrowers burdened by federal student loan debt.
Details of the president’s plan were published to the Federal Register, which starts the complicated process for changing federal policies under the Administrative Procedures Act.
The plan promulgated by the Department of Education hinges on repayment history spanning two decades or more, according to a report from The Epoch Times.
According to details shared by the Department of Education, this debt relief initiative will benefit those who have made a minimum of 240 or 300 qualifying payments, corresponding to 20 or 25 years, respectively.
Late, partial or deferred payments will now be factored into the eligibility determination. In a radical change, months of repayment pauses and periods of economic hardship also count toward these thresholds.
“By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans.,” said Secretary of Education Miguel Cardona in a statement.
“We are correcting those errors and as a result, more borrowers will have their loans discharged.”
Approximately 800,000 borrowers are anticipated to benefit from this program, as their federal student loan debt will be canceled. Individuals who have not been making payments for years may not be eligible.
Private loans are not included in the administration’s new initiative.
The Department of Education will begin debt cancellation immediately, notifying impacted borrowers as the process begins.
Debt discharges begin 30 days after emails are sent. The borrower’s loan servicer will inform them when it’s completed.
This move comes after a more ambitious plan from President Biden, aiming for broader loan forgiveness, was struck down by the Supreme Court. As per NBC News, Biden had previously proposed forgiving up to $20,000 for Pell Grant recipients and $10,000 for other federal borrowers. This plan met with resistance primarily due to concerns about the income limits set for beneficiaries.
While this loan forgiveness program brings a degree of relief to a segment of borrowers, critics argue that it falls short of the comprehensive reform needed to address the widespread issue of student loan debt in America.