Washington
CNN
—
The Biden administration announced Friday that it would use existing student loan forgiveness programs to cancel a total of $7.4 billion in new student loans for 277,000 borrowers.
Under President Joe Biden, the Department of Education has made it easier for some specific groups of borrowers, such as public sector employees, to qualify for loan forgiveness. It also offers new repayment plans that create a faster path to loan forgiveness for many low-income people, and is the subject of at least two legal challenges from Republican-led states.
In total, the Biden administration has approved canceling $153 billion in student loan debt for nearly 4.3 million people. This represents more than 9% of all outstanding federal student loans.
As the November election approaches, the Biden administration is keen to show how much student loan debt it has forgiven, making new announcements about debt forgiveness approximately once a month and sending emails directly to eligible borrowers. I also send . Earlier this week, Biden announced a new student debt relief proposal that could go into effect this fall.
Biden’s student loan forgiveness efforts have been harshly criticized by many Republicans, with the president shifting the costs to taxpayers who choose not to attend college or who already paid for it themselves. It is claimed that He also argues that he is circumventing the Supreme Court’s decision to reject last year’s student loan forgiveness program, Biden’s centerpiece.
In the past few weeks, two groups of Republican-led states have sued the Biden administration over income-driven repayment plans launched last year. This plan, known as SAVE (Savings for Valuable Education), offers the most generous terms to low-income borrowers.
About $3.6 billion of the student debt relief announced Friday will go to people enrolled in SAVE plans.
“Republicans in 18 states want to prevent their voters from benefiting from the SAVE plan. They want to end SAVE, increase voter payments, and keep them saddled with a never-ending mountain of loan debt. “We want to do that,” White House press secretary Karine Jean-Pierre said on a call with reporters Thursday.
Since SAVE launched last year, nearly 8 million borrowers have signed up, and about 360,000 have had their remaining debt canceled under the terms of the new plan.
Before SAVE, the federal government already offered several income-based repayment plans that tied monthly payments to a borrower’s income and family size. But under Biden’s new plan, some borrowers would see their monthly payments cut in half when the plan is fully phased out in July.
There is a forgiveness component for borrowers who have made monthly payments under SAVE for a certain number of years. This also applies to other income-based repayment plans, but with SAVE, it takes less time to receive debt forgiveness based on the amount a borrower originally borrowed. For example, a person who borrows less than $12,000 will have his debt forgiven after paying for 10 years, but if he enrolls in another plan it will take him more than 20 years.
Another benefit for borrowers enrolled in SAVE is that as long as monthly payments are made in full, no interest is accrued. This means that the borrower’s balance will not increase even if the monthly payment does not cover the interest accumulated that month.
Biden tried to implement a sweeping student loan forgiveness program in 2022, but it was struck down by the Supreme Court before any debt relief could be achieved. The program could wipe out up to $20,000 for borrowers earning less than $125,000 a year, and the cost is estimated at about $400 billion.
The high court ruled that the administration overstepped its authority.
Still, Biden canceled more student loan debt than any other president, largely through existing programs. His administration has made lending easier for certain groups of borrowers, such as public sector workers, including teachers. Disabled Borrowers; People who are duped by for-profit colleges to qualify for student loan debt forgiveness.
The Department of Education is also recounting past payments to correct administrative errors, bringing some people closer to debt forgiveness.
The Biden administration has been working on a series of new proposals since the fall to provide relief to specific groups of borrowers, based on separate legal authorities.
For example, people whose student loan balances are larger than the amount they originally borrowed may see their accumulated interest completely wiped out.
The proposals have not yet been finalized, but some could take effect as early as this fall, government officials said.
