Biden Administration to Forgive $116.6 Billion in Student Loans

The Biden-Harris Administration is providing more than $116.6 billion in student loan forgiveness to 3.4 million borrowers.

The Department of Education will begin notifying 804,000 of those borrowers that $39 billion of that debt will be automatically discharged in the following weeks, the department said in a Friday (July 14) press release.

These discharges will be enabled by ensuring borrowers have an accurate count of their monthly payments that go toward forgiveness of loans under income-driven repayment (IDR) plans, according to the release.

U.S. Secretary of Education Miguel Cardona said in the release, “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness. Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers.”

For those eligible, loan forgiveness will be granted if borrowers have accumulated the equivalent of either 20 or 25 years of making qualifying payments, according to the press release.

In the past, the administration of the federal student loan program made inaccurate counts of payments, so borrowers were deprived of their progress toward loan forgiveness, the release said. The “fixes” announced Friday are designed to turn that around.

Under Secretary of Education James Kvaal said in the release, “At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable. Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”

After a three-year-long hiatus, federal student loan repayments will resume in October, with interest to begin accruing in September.

PYMNTS research has found that consumers with federal student loans, who were already balancing prevailing interest rates, inflation and declining purchasing power, will now have to add one more financial responsibility to their plate.

The resumption of federal student loan repayments is concerning, even among those without federal student loans, according to “Consumer Inflation Sentiment: Back to School Means Back to Federal Loan Repayments.”

The report found that while just 20% of U.S. consumers held student loans, 54% of all consumers were at least slightly concerned about student loan repayments.