On Friday, the Education Department announced that it is going to cancel student debt for over 800,000 borrowers who previously qualified for forgiveness but were still saddled with loans, in one of the first major student debt moves since the Supreme Court struck down President Joe Biden’s plan for broad forgiveness late last month.
The administration is labeling its latest move as a “fix” to income driven repayment (IDR) plans, which have long promised forgiveness to people who have repaid their loans for 20 or 25 years, with payments in that time being adjusted based on their income. But, even though the program has existed for 25 years, only 32 people have ever gotten their loans forgiven under the program as of 2021, research has found.
The latest round of forgiveness comes after the Education Department analyzed “historical inaccuracies” in how payments were counted under IDR. Under IDR, borrowers are eligible for forgiveness after 240 or 300 monthly payments — but officials said the program previously didn’t count months that should have been eligible to be added to that total, including months in which a borrower submitted a payment late, were in an extended forbearance period, or were experiencing economic hardship.
Including these months meant that the department had an “accurate count” of the number of months that qualified a borrower for forgiveness, officials said. There will be a total of $39 billion in loans forgiven, averaging out to roughly $49,000 of relief per borrower.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Secretary of Education Miguel Cardona in a statement. “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.”
The announcement comes two weeks after the Supreme Court struck down Biden’s plan to cancel up to $20,000 of student debt for borrowers across the country under the HEROES Act, which would have delivered relief to tens of millions of borrowers. Now, advocates are demanding that Biden pursue other avenues of broad-based student debt relief — and that he do it quickly, before the student loan payment pause comes to an end in October.
IDR has long been criticized by debt advocates for failing millions of borrowers. Even with Friday’s announcement, advocates are pointing out that the administration has still left potentially millions of borrowers behind who qualify for relief under IDR.
“As costly payments are set to resume, the Biden administration should accelerate their timelines on delivering relief,” Braxton Brewington, Debt Collective spokesperson, said in a statement to Truthout. “The Department of Education must use its authority to eliminate all student debt for people who have been in failed repayment plans for more than two decades — which means nearly 4 million more borrowers need IDR account adjustments today. As clearly shown by this announcement, they can do that immediately and automatically.”
Student Borrower Protection Center Deputy Executive Director Persis Yu said that the announcement only comes after the program already failed borrowers. “[M]ake no mistake — over 804,000 people are receiving relief with this action because of 804,000 failures—and this is only the tip of the iceberg. Working people with student loan debt have been made collateral damage by a dysfunctional student loan system,” Yu said in a statement. “Now, our leaders need to finish the job.”
The administration’s authority to cancel debt under IDR is granted by the Higher Education Act — the same law that advocates say gives Biden the authority to cancel all student debt, not just for a targeted group.
Shortly after the Supreme Court decision was handed down, the Biden administration announced a set of moves aimed at further pursuing cancellation, including “initiat[ing] a rulemaking process” to explore relief under the Higher Education Act and creating an “on-ramp” to lessen pressure on borrowers in the first 12 months after payments restart.
But advocates have fiercely criticized this plan, saying that it is “designed to fail” and condemning the administration for continuing to delay forgiveness despite the Supreme Court decision having been forecasted for months before it happened.