The Biden administration has initiated the discharge of $39 billion in student debt for thousands of borrowers, as reported by Politico.
This move comes after the Department of Education (DOE) announced in July that it would automatically forgive $39 billion of student loan debt for over 804,000 borrowers who have been in repayment for more than 20 years.
This decision follows a recent Supreme Court ruling 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.
In June, the Supreme Court ruled 6-3 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. In response to this ruling, the DOE announced that it would utilize the Higher Education Act and expand income-driven repayment plans to forgive student loans.
Under the new plan, payments for those earning $32,800 or less annually would be reduced to $0. Additionally, borrowers who missed their loan payments within the first year, starting from October 1, would not face penalties.
While the DOE estimates that the new plan will save borrowers approximately $1,000 annually, the expansion of income-driven repayment plans is projected to cost taxpayers up to $558.8 billion over the next decade.
This has prompted organizations like the Cato Institute and the Mackinac Center for Public Policy to file a lawsuit challenging the constitutionality of the Biden administration's second attempt to forgive student loans.
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