$39 billion in student debt canceled for 800,000 borrowers

The relief will go to those with federal loans owned directly by the Education Department and who enrolled in income-driven repayment plans. Those plans cap the payments that borrowers owe to a percentage of their income. Under those plans, borrowers must make payments for a term that is typically 20 or 25 years. At the end of that period, any remaining balance is forgiven.

The planned move comes two weeks after the Supreme Court struck down President Joe Biden’s plan to eliminate $400 billion in student loan debt for tens of millions of borrowers. The court ruled that the president lacked the authority to eliminate debts so broadly without explicitly congressional authorization.

The debt elimination — which will happen in the next few weeks, the Education Department said — is part of a plan the Biden administration announced last year to address the problem of servicers’ mistakes. The department decided to automatically and retroactively credit millions of borrowers for late or partial payments and for long stretches of time before the pandemic with their payments in forbearance.

So-called “forbearance steering” was a particularly glaring issue, the department said last year. Low-income borrowers can qualify for monthly bills of $0 through income-driven payment plans, but loan servicers often placed struggling borrowers on forbearance — a move that kept their loans in good standing but meant that interest continued accruing, inflating borrowers’ balances.

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