White House Wipes Out Student Debt of 800K

Adjustment affects only those who have made payments for years under 'IDR' plans
By Newser Editors,  Newser Staff
Posted Jul 14, 2023 1:34 PM CDT
White House Wipes Out Student Debt of 800K
Graduates line up before the start of a community college commencement in East Rutherford, N.J.   (AP Photo/Seth Wenig, File)

The Supreme Court rebuffed President Biden's plan to wipe out the student debt of millions of borrowers. Now comes a more modest move by the White House that will nonetheless cancel the remaining debt for about 800,000 borrowers, reports the Washington Post. The move affects only those who have made payments for at least 20 years while enrolled in what are known as income-directed repayment plans, or IDRs. The Education Department used its authority to make an adjustment to the loans that it says corrects longstanding mistakes made by loan servicers that collected payments for the government over the years, per the New York Times.

"For far too long, borrowers fell through the cracks of a broken system," education secretary Miguel Cardona said Friday in announcing the move. NPR outlined the problem in a 2022 investigation. Borrowers' payments in IDR plans are pegged to their income, and the loans are designed to help those who can't make large monthly payments. The loans were supposed to be forgiven if borrowers made payments for at least 20 years (sometimes longer, depending on their plan), but NPR discovered a jarring stat—"4.4 million borrowers had been repaying for at least 20 years but only 32 had had loans canceled under IDR." (Read more student loans stories.)

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