The Biden administration is beginning to discharge $39 billion of student debt for thousands of borrowers on Monday, according to Politico.
In July, The Department of Education (DOE) announced that it would automatically forgive $39 billion of student loan debt for more than 804,000 borrowers who have been in repayments for more than 20 years, following a recent ruling by the Supreme Court that blocked the administration’s plan to grant forgiveness to nearly 40 million Americans.
Borrowers who had applied for the most recent student loan relief had until Sunday to opt out of the potential discharge program, Politico reported.
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The Supreme Court ruled 6-3 in June that the Secretary of Education did not have the executive power to cancel up to $10,000 in student loan debt for non-Pell Grant recipients and up to $20,000 for Pell Grant recipients.
The DOE later announced that, in light of the Supreme Court’s ruling, the department would use the Higher Education Act and an expansion of income-driven repayment plans to forgive student loans. The new plan would slash payments for those making $32,800 or less annually, to $0.
The new plan would not penalize borrowers who missed their loan payments within the first year, beginning on Oct. 1.
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Though the DOE estimates that the new plan will save borrowers an estimated $1,000 annually, the expansion of the income-driven repayment plans is estimated to cost taxpayers as much as $558.8 billion over the next ten years.
The Cato Institute and the Mackinac Center for Public Policy filed a lawsuit on Aug. 4 challenging the constitutionality of the Biden administration’s second attempt to forgive student loans.
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