WASHINGTON — The Department of Education announced Friday that it will automatically forgive student loans for more than 800,000 borrowers.
The action is the result of what the department calls a «fix» to income-based payment plans. It is expected to total $39 billion in federal student loan forgiveness.
The department said the measure will address administrative problems in the income-based pay system. Under the plans, federal student loan borrowers are eligible for forgiveness after 20 or 25 years of payments, depending on the plan. But for some, qualified payments that “should have moved borrowers closer to forgiveness” were not taken into account, he said in a news release.
The Supreme Court struck down President Joe Biden’s plan to forgive up to $20,000 in debt to 43 million federal student loan borrowers in a 6-3 ruling last month, dealing a blow to one of his key campaign promises.
Immediately after the ruling, Biden said his administration would explore other avenues for relief. “Today’s decision has closed a path. Now we are going to look for another one, ”he said.
Biden also said he was directing the Department of Education to formulate a new plan for loan forgiveness based on the Higher Education Act. He promised that the proposal would be «legally sound» and warned that it «will take more time.» Details of the new plan have yet to be announced.
Friday’s announcement is a smaller step the Biden administration is taking to seek federal student loan relief with existing authority.
“For too long, borrowers fell through the cracks of a broken system that failed to keep an accurate record of their progress toward forgiveness,” Education Secretary Miguel Cardona said in a statement. «By correcting past administrative failures, we make sure everyone gets the forgiveness they deserve.»
In a letter to Cardona on Friday, Republican Sen. Eric Schmitt of Missouri criticized the department for the move, saying «this action continues this administration’s march to bypass Congress and enact economy-wide change by fiat.»
“The ink was not even dry on the Court’s decision, yet it appears this Administration intends to capitulate to the far-left extremes of the Democratic Party and use Section 432(a) of the Higher Education Act to enact a new debt cancellation plan. said Schmitt, who previously sued the administration as Missouri’s attorney general over its original student debt relief plan.
He added: “I have no intention of standing by while this administration once again pushes through an illegal plan that will require working American taxpayers to foot the bill.”
rebecca shabad and Liz Brown-Kaiser contributed.