U.S. News

$2.8 billion in student debt to be canceled under Biden program

By Jake Beardslee · October 30, 2023

Thousands of student loan borrowers with older debts will receive notification this week that they qualify for forgiveness under a Biden administration initiative. An estimated 51,000 borrowers will have their loans canceled in this latest phase, after an initial group received discharges over the summer.

The Department of Education projects that approximately $2.8 billion in student loans will be forgiven in this round. Many eligible borrowers did not need to apply for this relief, which targets Americans enrolled in income-driven repayment plans.

The forgiveness comes through the Income-Driven Repayment (IDR) Account Adjustment. IDR plans provide reduced payments over 20-25 years depending on the loan, then forgive any remaining balance. This account adjustment allows more months spent in repayment or deferment since leaving school to count toward IDR forgiveness, even if borrowers were never in those plans before.

The notice sent this week says in part: ‘Congratulations! The Biden-Harris Administration has forgiven your federal student loan(s) listed below in full,” according to Forbes.

So far over 850,000 borrowers have seen debts canceled under the program, with over $40 billion in discharges completed or pending.

In June, the Supreme Court nullified Biden’s broader student loan forgiveness plan offering up to $20,000 in relief. Biden has since pursued targeted debt relief programs.

The Education Department says this latest round will cancel $2.8 billion in student loans. Federal loan payments resumed October 1st after a pandemic pause. Borrowers faced website issues and scams amid confusion about restarting payments. The Department penalized servicer Mohela this week for failing to send billing statements to 2.5 million borrowers. As a result, over 800,000 borrowers were delinquent on loans.