The Biden administration announced Friday that it would move to forgive $39 billion in student debt for around 804,000 borrowers.
The change comes as the Biden administration struggles to advance its agenda of student loan forgiveness after the Supreme Court declared its earlier program was illegal.
The new plan would count more payments toward a longstanding forgiveness program that provides debt relief when borrowers have made student loan payments for 20 or 25 years.
According to the Biden administration, this change is a “fix” to the pre-existing program. The administration says that the program was not including all the payments it should have been, including some late payments or payments paused during certain deferments and forbearances.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Education Secretary Miguel Cardona said in a statement.
The loans are owed to the U.S. government. So forgiven balances subtract from the government’s revenue, increasing the budget deficit. The Biden administration did not announce any spending cuts that would offset the lost revenue from the expanded forgiveness program.
