Yahoo Finance Biden administration discharges another $9 billion in student loan debt
President Joe Biden today wiped away an additional $9 billion in student debt.
Since he took office, his administration has discharged $127 billion in student loan debt for more than 3.5 million borrowers.
The total discharged debt includes $51 billion for 715,000 borrowers through the public service loan forgiveness (PSLF); $11.7 billion for permanent disability discharges for more than 513,000 borrowers; $42 billion for 855,000 borrowers under the one-time income-driven repayment (IDR) adjustment; and $22.5 billion for more than 1.3 million defrauded borrowers, according to the Education Department (ED).
Read more: Worried about when student loan repayments resume? These programs could help
The additional $9 billion announced today by the Department of Education includes $5.2 billion for 53,000 PSLF borrowers, $2.8 billion for 51,000 borrowers under the one-time payment adjustment for income-driven repayment plans, and $1.2 billion for nearly 22,000 borrowers with a total or permanent disability.
This announcement comes after borrowers started repaying loans this month after a three-year pandemic forbearance pause.
Miguel Cardona, US Secretary of Education, said in a press release: "Today’s announcement builds on everything our administration has already done to protect students from unaffordable debt, make repayment more affordable, and ensure that investments in higher education pay off for students and working families.”
Here's a breakdown of the total debt discharged:
PSLF loans discharged for military and certain professions in public service
Teachers, nurses, doctors, lawyers, and other professionals who work in public service jobs with federal, state, local, or certain nonprofit organizations are eligible to have their remaining loan balances discharged after 10 years of payments through the PSLF program.
PSLF is also available for military service members who don’t qualify for other, military loan forgiveness programs.
The number of PSLF borrowers who got a discharge increased because of a settlement following a lawsuit from the American Federation of Teachers (AFT). (The settlement provided for a PSLF waiver, which allowed those denied loan forgiveness to reapply by October 2022.)
The AFT sued the ED after more than 98% of borrowers who applied for the PSLF program were denied loan forgiveness when Betsy DeVos was US Education Secretary under the Trump administration.
Around 715,000 borrowers had over $51 billion discharged under PSLF.
Biden administration removed challenges for borrowers eligible for disability discharge
Borrowers who have a total and permanent disability are also eligible for student loan debt discharges.
Typically, military veterans who have a 100% disability connected to military service or who have a serious disability and are receiving Social Security benefits qualify.
More than 513,000 disabled borrowers received $11.7 billion in debt discharged.
Defrauded borrowers or those whose schools closed can apply for discharge
More than 1.3 million borrowers had over $22 billion in debt discharged under the “closed school loan discharge” and “borrower loan defense discharge” programs.
The “closed school loan discharge” and “borrower loan defense discharge” programs allow borrowers to get their student debt discharged if their school closes while enrolled or if the school misled students.
Borrower defense applications surged after the Obama administration cracked down on predatory for-profit colleges in 2015 and created new regulations, but the mechanism for defrauded borrowers seeking debt relief broke down during the Trump administration.
Read more: Student loan issues? Here's how to file a complaint with the Department of Education
Advocates sued the Biden-era Education Department over the slow-moving debt relief process for students who said they had been waiting years for debt relief under the borrower defense to repayment process.
Recently, the Fifth Appellate Circuit granted an injunction against the Department of Education's updated borrower defense rules that went into effect on July 1.
The new rules would prevent schools from making students sign mandatory arbitration agreements and provide automatic student debt relief a year after a school closes, according to The Hill.
One-time payment adjustment for income-driven repayment plans
More than 855,000 borrowers had over $42 billion discharged under the one-time payment adjustment for income-driven repayment plans.
The one-time payment adjustment, announced last year, counts certain months that were previously ineligible for student loan forgiveness under income-driven repayment plans.
The one-time payment adjustment helps to reverse some of the damage caused by loan servicers that did not properly track deferments or steered borrowers to forbearance instead of income-driven repayment plans that would have counted toward years of payment.
Borrowers that were in repayment for 20-25 years started to see their debt discharged and receive notices in August.
All other federal loan borrowers will see the adjustment applied in 2024.
Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda
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