Remember when you graduated and the joy of finally tossing your cap was immediately squashed by the impending doom of student debt repayments? Well, 800,000 American students are feeling a lot lighter today, thanks to the Biden Administration’s decision to cancel their student debt. A cool wind of relief after a long-time heatwave of loan anxiety!
Late last month, the Supreme Court threw a wrench into Biden’s plan for extensive student debt forgiveness. Still, this didn’t deter the administration. Not one bit. They’re now “fixing” the Income-Driven Repayment (IDR) plans. For over two decades, IDR plans have tantalized students with the promise of forgiveness after 20 or 25 years of income-based payments. But the grim reality? Only 32 lucky souls have ever seen this promise fulfilled.
The Biden Administration’s latest forgiveness wave follows a thorough review of “historical inaccuracies” in payment tracking under IDR. The aim? To ensure that the qualifying payments made, but previously overlooked due to various reasons, such as late submission, extended forbearance period, or economic hardship, are counted towards loan forgiveness.
This act of financial reparation equates to a staggering $39 billion in forgiven loans, averaging about $49,000 in relief per student. That’s a new car, a substantial house deposit, or perhaps even the launchpad for a promising startup!
Education Secretary Miguel Cardona says, “For far too long, borrowers fell through the cracks of a broken system that failed to keep an accurate track of their progress towards forgiveness.” Indeed, it’s about time the system stops punishing those trying to better themselves through education.
While this news is encouraging, the fight for broad-based student debt relief is far from over. Advocates argue that Biden’s Administration should step up their timelines for delivering relief as the student loan payment pause is set to end in October. There’s also an urgent call for relief for those who have been trapped in unproductive repayment plans for over two decades, numbering almost 4 million borrowers.
Persis Yu, Deputy Executive Director of the Student Borrower Protection Center, asserts that this latest development is just the tip of the iceberg. Borrowers have been failed by a dysfunctional system that treats them as collateral damage.
Biden’s latest move under the Higher Education Act, the same law that advocates say could permit the cancellation of all student debt, signals hope for broader relief. It’s evident that, despite setbacks, Biden is not backing down on this issue. The Biden Administration has committed to exploring relief under the Higher Education Act and lessening the pressure on borrowers when payments restart.
Critics, however, argue that this plan is “designed to fail,” citing a lack of urgency despite the forecasted Supreme Court decision. The battle for broad-based student debt relief continues, but for now, 800,000 students have a reason to celebrate.
