- The Biden administration announced it would automatically cancel education debt for 804,000 borrowers, for a total of $39 billion in relief.
- The debt cancellation is a result of the administration's fixes to repayment plans, which included updated counts of borrowers' payments.
The Biden administration announced Friday it would automatically forgive $39 billion in student debt for 804,000 borrowers.
The relief is a result of fixes to the student loan system's income-driven repayment plans. Under those repayment plans, borrowers get any remaining debt canceled by the government after they have made payments for 20 years or 25 years, depending on when they borrowed, and their loan and plan type.
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In the past, payments that should have moved a borrower closer to being debt-free were not accounted for, according to the Biden administration.
"For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness," U.S. Secretary of Education Miguel Cardona said in a statement.
To bring people over the line for forgiveness, the Biden administration counted payments for borrowers who'd paused their payments in certain deferments and forbearances and those who'd made partial or late payments.
Money Report
The announcement comes weeks after the Supreme Court struck down President Joe Biden's sweeping student loan forgiveness plan, which would have delivered relief to about 37 million people.
The Education Department will notify eligible borrowers in the coming days.
