Many students receive debt relief in the US. Here's why

The Supreme Court denied debt relief to most federal student loan holders. Still, some borrowers are beginning to have their balances wiped away, according to a Bloomberg report.

The government announced Monday that at least $116 billion in assistance for 3.4 million debtors hasbeen granted through a variety of programs. This is still a small portion of the $1.8 trillion overall federal student debt amount, and the White House announced in June that it will look into new options for canceling some of these debts.

The United States Department of Education recently began forgiving $39 billion in student debt for over 800,000 students who registered in income-driven repayment plans and made monthly payments for at least 20 years.

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In April of last year, the Biden administration undertook a one-time attempt to fix administrative mistakes that had left borrowers on the hook for repayments when their balances should have gone to zero.

Bloomberg interviewed Shannon Short, who is 52 and has had student debt since college in 1988. His $299,000 debt has now been reduced to zero as a result of what amounts to a record-keeping modification. He owed more than $140,000, up from $140,000 in 2005, and he planned to make monthly payments of roughly $700 when bills resumed in October.

Bloomberg quoted him as saying, "I sat there and cried for 20 minutes. This debt relief has changed my whole financial future."

Furthermore, for decades, Income-Driven Repayment (IDR) and public service loan forgiveness programs have provided avenues for getting amounts removed, but record-keeping errors have resulted in low levels of debt being wiped away, according to Government Accountability Office audits.

The Biden administration is now attempting to resolve long-standing concerns by changing records so that qualifying borrowers may be eligible for balance discharge based on loan type. The initiative is distinct from the main forgiveness plan, which was introduced in August of last year andapproximately cost $400 billion.

(Inputs from Bloomberg)