The Biden administration announced today that it has forgiven $39 billion (£29.7 billion) in student loan debt for 804,000 borrowers on income-driven repayment programmes.
The alleviation is the consequence of “fixes” made to the plans by the government, according to the administration.
Qualifying borrowers engaged in the scheme will be notified in the coming weeks whether their loans will be discharged, according to the Department of Education.
The announcement comes just weeks after the United States Supreme Court ruled against President Joe Biden’s bigger student loan package.
According to the education department, the measure will correct administrative errors that resulted in some borrowers’ payments not counting towards their eligibility for student loan relief.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” said US Secretary of Education Miguel Cardona in a statement.
According to officials, borrowers are eligible for forgiveness after 20 or 25 years of payments, depending on their plan.
The United States government offers a variety of income-driven repayment programmes, sometimes known as IDR plans, in which borrowers make monthly loan payments depending on their income over the course of 20 or 25 years.
The administration originally indicated in April 2022 that it would make revisions to the plan to rectify “historical inaccuracies in the count of payments that qualify for forgiveness under IDR plans,” according to the education department.
The US Supreme Court ultimately shot down Mr. Biden’s wider plan to cancel billions of dollars in student loans for more than 40 million Americans last month in a 6-3 verdict. The Supreme Court ruled that the Biden administration exceeded its jurisdiction with the programme, which would have forgiven up to $20,000 per borrower in some situations.
Mr. Biden promised to find a different approach to offer student loan forgiveness soon after the verdict was issued. “Today’s ruling has effectively closed one path. “We’re going to start another now,” he explained.
Since taking office, Mr. Biden has used executive orders to provide student loan relief to smaller groups. For example, last year he annulled student loan debt for 200,000 borrowers who claimed their universities had injured or deceived them.