Borrowers are relieved of any remaining debt if they have made payments for 20 or 25 years
The Biden administration announced that it will automatically write off student debt for 804,000 borrowers, with total relief estimated at $39 billion.
The debt cancellation comes as a result of the US government's corrective actions regarding repayment plans and updated calculations of debt and payments relative to income.
Borrowers are relieved of any remaining debt if they have make payments for 20 or 25 years (depending on when they took out the loan and the type of loan).
According to the Biden administration, payments that should have brought borrowers closer to repayment were not counted properly from debt.
“For too long, they have been 'falling' through the gaps of a flawed system that did not accurately record their progress,” U.S. Education Secretary Miguel Cardona said in a statement.
Percy Wu, deputy executive director at the Student Loan Protection Center commented: “Make no mistake (….) this is just the tip of the iceberg.”
The announcement comes just weeks after the Supreme Court struck down Joe Biden's sweeping write-off plan student loans, which would provide relief to approximately 37 million citizens.
The Department of Education will notify borrowers who are exempted within the next few days.
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