Biden administration to cancel nearly $5 billion in student debt for 80,000 borrowers

“From Day One of my Administration, I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity – not unmanageable burdens of student loan debt,” President Joe Biden said in a statement announcing the relief.  “I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams.”

The cancellation announced Wednesday is separate from the mass plan for student-debt forgiveness the Biden administration has been pursuing for nearly two years. The initial version of the plan, which would have canceled up to $20,000 in student debt for a wide swath of borrowers, was struck down by the Supreme Court in June. Officials are in the process of taking another stab at a broader plan for student-loan forgiveness.

In the meantime, the Biden administration has been canceling student loans for borrowers who qualify for existing relief programs, but who have struggled to access them due to technicalities, servicer errors and other issues. With Wednesday’s announcement the total amount of debt forgiveness approved by the Department of Education through this strategy now stands at $132 billion. 

The borrowers impacted by Wednesday’s announcement are made up of two groups. Nearly 46,000 borrowers are those who have been in repayment on their loans for at least 20 years. The relief is coming through fixes to income-driven repayment, the plans that allow borrowers to pay back their debt as a percentage of their income and have the remainder canceled after at least 20 years.  

Despite the promise of relief under the plans, borrowers who were in repayment for decades still weren’t receiving forgiveness. According to advocates and lawsuits, borrowers struggled to access this relief in part because servicers steered struggling borrowers towards forbearance, a status where student-loan payments are paused, but where borrowers don’t build credit towards debt cancellation. 

The Biden administration announced in 2022 that to address this problem officials would review borrowers’ accounts and adjust them so that their credit towards forgiveness was accurately reflected. So far, the Biden administration has canceled debt for nearly 901,000 borrowers — including the 46,000 who are part of Wednesday’s announcement — through that program. 

The other group that’s part of Wednesday’s announcement are 34,400 borrowers who work for the government or certain nonprofits and have been in repayment on their loans for at least 10 years. 

Public servants are eligible to have their debt forgiven after 10 years of payments through the Public Service Loan Forgiveness program. But for years, borrowers who have met the spirit of the law struggled to actually access that relief due to paperwork challenges and technicalities. In 2021, the Biden administration made changes that smoothed out the process towards cancellation under PSLF. 

Borrowers who are part of Wednesday’s announcement have been notified they’ll be receiving relief, according to a senior Department official. They should see their debt canceled within a few weeks, the official said.

Wednesday’s announcement comes as borrowers are working through the first few months of repaying their student loans after a more than three-year pause. Borrowers have reported challenges getting accurate information about their monthly payments, getting ahold of servicers and receiving debt cancellation they’ve been promised. 

“We know there are so many more student loan borrowers who have been failed by this broken student loan system and still need help,” Secretary of Education Miguel Cardona said on a call with reporters announcing the relief. “Let me be very clear, we have no intention of slowing down.”