• The Biden administration announced it would automatically cancel education debt for 804,000 borrowers, for a total of $39 billion in relief.
  • The debt cancellation is a result of the administration's fixes to repayment plans, which included updated counts of borrowers' payments.
President Joe Biden announces new actions on June 30, 2023 to protect borrowers after the Supreme Court struck down his student loan forgiveness plan.

The Biden administration announced Friday it would automatically forgive $39 billion in student debt for 804,000 borrowers.

The relief is a result of fixes to the student loan system's income-driven repayment plans. Under those repayment plans, borrowers get any remaining debt canceled by the government after they have made payments for 20 years or 25 years, depending on when they borrowed, and their loan and plan type.

In the past, payments that should have moved a borrower closer to being debt-free were not accounted for, according to the Biden administration.

"For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness," U.S. Secretary of Education Miguel Cardona said in a statement.

To bring people over the line for forgiveness, the Biden administration counted payments for borrowers who'd paused their payments in certain deferments and forbearances and those who'd made partial or late payments.

People walk on the campus of the University of North Carolina Chapel Hill on June 29, 2023 in Chapel Hill, North Carolina.

Although the forgiveness is a huge victory for borrowers, it is relief to which they were entitled, said Persis Yu, deputy executive director at the Student Borrower Protection Center.

"[M]ake no mistake — over 804,000 people are receiving relief with this action because of 804,000 failures — and this is only the tip of the iceberg," Yu said in a statement. "Working people have been made collateral damage by a dysfunctional student loan system."

The announcement comes weeks after the Supreme Court struck down President Joe Biden's sweeping student loan forgiveness plan, which would have delivered relief to about 37 million people.

The Education Department will notify eligible borrowers in the coming days.