- The Education Department announced $9 billion in student-debt relief for 125,000 borrowers.
- It impacts borrowers in public service, on income-driven plans, and those with total and permanent disabilities.
President Joe Biden's Education Department just announced its latest batch of student-debt relief for targeted groups of borrowers.
On Wednesday, the department announced that it has approved $9 billion in debt cancellation for 125,000 borrowers. This relief is a result of recent changes to key student-loan repayment plans: $5.2 billion of the relief is for 53,000 borrowers in the Public Service Loan Forgiveness program, $2.8 billion of the relief is for 51,000 borrowers who made the required 20 or 25 years of payments on income-driven repayment plans, and $1.2 billion of the relief is for 22,000 borrowers who have a total and permanent disability and were approved for debt relief by the Social Security Administration.
"For years, millions of eligible borrowers were unable to access the student debt relief they qualified for, but that's all changed thanks to President Biden and this Administration's relentless efforts to fix the broken student loan system," Education Secretary Miguel Cardona said in a statement. "The Biden-Harris administration's laser-like focus on reducing red tape, addressing past administrative failures, and putting borrowers first have now resulted in a historic $127 billion in debt relief approved for nearly 3.6 million borrowers."
Over the past year, the Education Department has been moving forward with changes to repayment programs to get relief to borrowers who were still facing bills even after making the required payments. That included a one-time account adjustment for borrowers on income-driven repayment plans and PSLF — most recently, the department announced it had approved relief for 804,000 borrowers on income-driven repayment. The department said it will evaluate borrowers' accounts every two months to determine who else qualifies for relief, and Wednesday's announcement marks the second batch of borrowers who will see their balances zeroed out.
This announcement comes as millions of federal borrowers are once again beginning to pay off their student loans. After over three years on pause, interest began accruing on balances on September 1, and bills are starting to become due in October. It's an unprecedented transition back into repayment, and the department has announced some reforms to ease the process, including a 12-month "on-ramp" period during which missed payment will not be reported to credit agencies, along with the SAVE plan — a new income-driven repayment plan intended to make payments more affordable.
However, even with those reforms, the process has been far from easy for some borrowers. Many have been experiencing hours-long hold times to get help from their servicer, with others reporting inaccurate billing statements they're struggling to fix. Under Secretary of Education James Kvaal previously told Insider he's heard "a lot of confusion and anxiety" from borrowers, and he's staying in close contact with servicers as the repayment process plays out.
Meanwhile, the Education Department is also in the process of creating its new broad student-debt relief plan after the Supreme Court struck down Biden's first route. Last week, it released new details regarding how it is crafting the plan — and which borrowers might be eligible for broad relief whenever it becomes available.