The Biden administration will write off $34 billion in student loan debt, affecting 804,000 borrowers. The White House announcement came on July 14 and states that the administration has “fixed” Income-Driven Repayment Plans (IDR) and addressed past failures in administering the Federal student loan program “in which qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for.”
A statement from Vice President Kamala Harris promised to go further and said future repayment amounts will be dramatically cut. She said the administration intends to use legislation – specifically the Higher Education Act – to reduce monthly payments by half for undergraduate students. “Our Administration will continue to fight to make sure Americans can access high-quality postsecondary education without taking on the burden of unmanageable student loan debt,” the Vice President said.
Students will be eligible for relief if they have made either 20 or 25 years of monthly IDR payments, and Education Secretary Miguel Cardona said the system has, to date, failed to accurately record people’s payments such that relief was not applied.
The government’s announcement comes in the wake of a Supreme Court rejection of the Biden administration’s previous plan that would have canceled $430 billion in debt. Six Republican-led states challenged the President’s proposals and the court ruled in their favor. The justices said the White House needed Congressional approval to authorize the write-off of such a large amount, echoing arguments of Republicans who said Biden was acting outside his powers.
President Biden said he would stick to his campaign promise to cancel student debt, and if he could not do that via one route, he would open another. Legal experts say the new plan is unlikely to fail due to legal challenges, although such challenges are expected.
The Republican chair of the House Committee on Education and the Workforce Rep. Virginia Foxx accused the government of trampling on the rule of law by circumventing a Supreme Court decision.
