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Biden Cancels $39 Billion in Student Debt

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Elinor Rozenvasser Updated: July 17, 2023 • 3 min read
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Key Points:

  • Biden administration cancels $39 billion in student debt for over 800,000 borrowers.
  • This is the latest in a series of student loan relief measures taken by the Biden administration.
  • Borrowers who are eligible for forgiveness do not need to do anything. The Education Department will automatically update their accounts. If you are not sure if you are eligible, you can check your eligibility online at studentaid.gov. Additionally, you can contact the Education Department for assistance.

Here's What Happened:

On Friday, July 14, 2023, the Biden administration announced that it would cancel $39 billion in student debt for more than 800,000 borrowers. This is the result of a "fix" to income-driven repayment (IDR) plans, which cap payment requirements for lower-income borrowers and forgive their remaining balance after a set number of years.

Who makes the cut?

To be eligible for forgiveness, student loan holders must have made either 20 or 25 years of monthly IDR payments. The department said that this relief addresses "historical inaccuracies" in the count of payments that qualify for forgiveness under IDR plans.

Here's What It Means:

This is the latest in a series of student loan relief measures that the Biden administration has taken. In total, the administration has provided over $116 billion in loan relief to over 3 million students.

The cancellation of $39 billion in student debt is a significant step forward in the fight to make college more affordable. It will help to relieve the burden of debt for hundreds of thousands of borrowers and give them a fresh start.

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Here's What To Do:

If you are a borrower who is eligible for forgiveness under this program, you do not need to do anything. The Education Department will automatically update your account and forgive your remaining balance.

If you are not sure if you qualify, you can check your eligibility online at studentaid.gov. You can also contact the Education Department for assistance.

This is a great opportunity to get relief from student loan debt. 

In addition to the $39 billion in student debt cancellation, the Biden administration has also taken other steps to make college more affordable. These include:

  • Expanding the Public Service Loan Forgiveness (PSLF) program, which forgives the remaining balance of student loans for borrowers who work full-time in public service.
  • Making it easier for borrowers to consolidate their loans and get lower interest rates.
  • Allowing borrowers to defer their loans during periods of economic hardship.

Biden's government is committed to making college more viable for all Americans. These steps are a significant step forward in that effort.

FAQ

  1. Who is eligible for the cancellation? The cancellation is for borrowers who have made 20 or 25 years of monthly IDR payments.
  2. How do student loan holders know if they qualify? Borrowers can check their status online at studentaid.gov.
  3. What happens if I am not eligible for the cancellation? If you are not eligible for the cancellation, you may alternatively be eligible for other student loan relief programs.
  4. What are the implications of the cancellation? The cancellation will have a number of implications, including:
    • It will reduce the amount of debt that student loan holders have to repay.
    • It will free up borrowers' income to spend on other things, such as housing, transport, and healthcare.
    • It will boost the economy by upping consumer spending.
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Written by Elinor Rozenvasser

Elinor Rozenvasser is a content writer and editor with a knack for finance. She holds a Bachelor's in Communications and Business from Reichman University, and has been swimming alongside finance specialists for over a decade. She's not your typical financial writer, though. She's more likely to use witty puns and sarcasm than jargon and technical terms. But don't let that fool you. She's still a whiz when it comes to explaining complex financial concepts in a way that anyone can understand. If there's any writer who can make finance fun and engaging, Elinor is your girl. She's sure to leave you laughing (and learning) long after you've finished reading her work.