The federal government announced a new student loan forgiveness plan on Friday that will cancel $39 billion in federal debt for over 800,000 borrowers.
"The forthcoming discharges are a result of fixes implemented by the Biden-Harris Administration to ensure all borrowers have an accurate count of the number of monthly payments that qualify toward forgiveness under income-driven repayment (IDR) plans," the U.S. Department of Education (DOE) said in a press release. "These fixes are part of the Department's commitment to address historical failures in the administration of 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."
According to the announcement on Friday, the new student loan debt forgiveness program is eligible for borrowers that have made payments "equivalent of either 20 or 25 years of qualifying months."
"Under the Higher Education Act and the Department's regulations, a borrower is eligible for forgiveness after making 240 or 300 monthly payments—the equivalent of 20 or 25 years on an IDR plan or the standard repayment plan," the announcement said, adding that when the borrower first took out the loan, the specific loan type they have and the current IDR plan they are currently enrolled in, are all factors in determining eligibility.
Friday's announcement comes as President Joe Biden's administration has continued to work on student loan debt forgiveness plans after the U.S. Supreme Court blocked his student loan debt cancellation plan late last month.
A debt cancellation plan previously announced by Biden sought to cancel up to $20,000 in debt for Pell Grant recipients and up to $10,000 in debt for those with an income of $125,000 or less. The Supreme Court said that Biden and DOE Secretary Miguel Cardona did not have the authority to cancel the debt and sided with several Republican-led states that initially filed lawsuits against the plan.
Meanwhile, some loans that will receive forgiveness under the new plan include "Direct Loans or Federal Family Education Loans held by the Department (including Parent PLUS loans of either type)." The DOE will notify eligible borrowers in the coming days through the next year, every two months, the announcement said.
"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," Cardona said in a statement.
Last month, the White House announced another plan to forgive student loan debt, called the Saving on a Valuable Education (SAVE) plan. The IDR plan seeks to cut monthly payments on federal student loans down based on an individual's income and family size.
"This change means a single borrower who earns less than $32,805 a year ($67,500 for a family of four) will not have to make payments," the DOE said at the time.
Newsweek was directed to the press release after reaching out to the DOE on Friday.
