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Biden administration to cancel $39 billion in student loans

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The Department of Education announced Friday that $39 billion in federal student loan debt for about 800,000 borrowers will be “discharged,” or canceled, in the coming weeks.

The move comes just weeks after the Supreme Court struck down President Joe Biden’s effort to cancel hundreds of billions of dollars through the HEROES Act. That plan would have forgiven $10,000 per qualifying borrower and up to $20,000 for Pell Grant recipients.

The DOE plan announced this week would change how monthly payments are counted for those under the Income Driven Repayment plans. Those paying for more than two decades with lower monthly payments because of their income would qualify to potentially be impacted by this announcement.

“The Biden administration is trampling the rule of law, hurting borrowers, and abusing taxpayers to chase headlines,” Rep. Virginia Foxx, R-N.C., who chairs the House Committee on Education & the Workforce, said in a statement. “Biden’s student loan scam is far from over. From day one, this administration has encouraged borrowers not to repay their loans and has expected taxpayers to foot the bill.”

The Biden administration said the administrative changes to cancel old debts made the loan balances more accurate, but Republicans quickly blasted Biden’s latest loan forgiveness plan as a blatant attempt to circumvent the Supreme Court’s ruling.

In particular, Republicans blasted the part of Biden’s plan that allowed months where borrowers missed payments under a wide variety of circumstances to still count toward their total number of monthly payments made.

“Taxpayers should be enraged but not surprised. Don’t forget, this is the same agency that was called out for using cost estimates that weren’t grounded in reality,” she added.

U.S. Secretary of Education Miguel Cardona said the move was about fairness for disadvantaged borrowers and helping those “cheated” by colleges.

“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Cardona said in a statement announcing the decision. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans.

“This Administration will not stop fighting to level the playing field in higher education.”

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