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Biden's $7.7 Billion Student Loan Forgiveness Plan: Latest Updates, Implications, and Impact

Biden's $7.7 Billion Student Loan Forgiveness Plan: Latest Updates, Implications, and Impact

Biden Wipes Out $7.7 Billion More in Student Loans for 160,000 Borrowers

President Biden's New Student Loan Forgiveness Plan

President Joe Biden has unveiled a new student loan forgiveness plan, erasing $7.7 billion in debts. This latest move brings the total amount of student loans canceled under his administration to $167 billion. "Today, my Administration is canceling student debt for 160,000 more people, bringing the total number of Americans who have benefitted from our debt relief actions to 4.75 million," President Biden announced on May 22.

He went on to explain that each of these borrowers has received an average of over $35,000 in debt cancellation. The additional 160,000 borrowers are those enrolled in the administration's SAVE Plan, public service workers like teachers, nurses, and law enforcement officials, or borrowers who were approved for relief due to modifications made to Income-Driven Repayment (IDR).

Breakdown of the Debt Relief

Out of the $7.7 billion, $5.2 billion is relief granted to 66,900 borrowers under Public Service Loan Forgiveness (PSLF), a program for government and NGO employees. After a borrower has made 120 qualifying monthly payments on their debt, PSLF can forgive the remaining portion of the dues. To date, the Biden administration has approved $68 billion in forgiveness for over 942,000 borrowers under PSLF.

A total of $1.9 billion will go to provide relief to 39,200 borrowers through administrative adjustments made to individuals with IDR plans. The administration has thus far approved $51 billion in IDR relief for over one million borrowers.

The remaining $613 million in relief will be granted to 54,300 borrowers enrolled in the SAVE plan. Enrolled individuals can get relief if they've made payments for at least 10 years, provided they borrowed $12,000 or less. Approximately $5.5 billion in loan forgiveness has been granted to 414,000 borrowers under the SAVE plan by the Biden administration.

With this latest announcement, the Biden–Harris administration has approved $167 billion in loan forgiveness to 4.75 million Americans.

Political Implications of Loan Forgiveness

President Biden's latest loan forgiveness comes less than six months before the presidential election. The issue of student loans remains high on the agenda of younger voters, many of whom have concerns about Biden’s foreign policy on the war in Gaza and fault him for not achieving greater debt forgiveness.

The campaign of former President Donald Trump, Biden’s Republican challenger in the White House race, in March criticized the student loan cancellation as a bailout that was done “without a single act of Congress.”

A poll published by the Institute of Politics (IOP) at Harvard Kennedy School last month showed that younger voters were not particularly impressed with President Biden’s student debt relief plans—only 39 percent of poll participants approved of the president on the issue.

US Student Debt Burden

In June of last year, the Supreme Court voted to strike down the Biden administration’s massive student loan forgiveness program, which would have resulted in a government burden of about $800 billion or even over $1 trillion, according to some estimates.

President Biden criticized the SCOTUS decision. “They said no, no, literally snatching from the hands of millions of Americans thousands of dollars in student debt relief that was about to change their lives,” he said while promising to find a “new way” to circumvent the Supreme Court ruling.

Last month, President Biden detailed a new proposal that would cancel at least some debt for more than 30 million Americans. It’s been in the works for months after the Supreme Court rejected Biden’s first try at mass cancellation.

The latest proposal is more targeted than his original plan, focusing on those for whom student debt is a major obstacle. The new plan uses a different legal justification—the Higher Education Act, which allows the Secretary of Education to waive student loan debt in certain cases.

The Education Department has been going through a federal rulemaking process to clarify how the secretary can invoke that authority.

The new plan targets five categories of borrowers, focusing on those believed to be in the greatest need of help. It would provide relief to an estimated 30 million borrowers. The administration has not said how much the plan would cost.

As of the end of 2023, 43.2 million U.S. student loan recipients had over $1.6 trillion in outstanding loans, according to the website of the Federal Student Aid website, an office of the U.S. Department of Education. Higher education debt has tripled since the 2008 financial crisis.

Conclusion

Student loan forgiveness is a complex and contentious issue. While some see it as a necessary relief for millions of Americans burdened with debt, others view it as an unfair benefit to certain groups and an overreach of presidential authority. What are your thoughts on this matter? Share this article with your friends and sign up for the Daily Briefing, which is every day at 6pm.

Some articles will contain credit or partial credit to other authors even if we do not repost the article and are only inspired by the original content.

Some articles will contain credit or partial credit to other authors even if we do not repost the article and are only inspired by the original content.

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