The Biden administration is canceling student loans for another 206,000 borrowers as part of a new repayment plan that offers a faster route to forgiveness. This update is part of the progress of the SAVE Plan, which aims to provide relief to borrowers who have struggled with student loan repayment. The Education Department has now approved cancellation for about 360,000 borrowers through this new plan, totaling $4.8 billion. However, the plan has faced legal challenges, with two lawsuits filed by Republican-led states arguing that the Biden administration overstepped its authority in creating this repayment option.
The SAVE Plan is an updated version of a federal repayment plan that provides more generous terms for borrowers. The Biden administration merged previous income-driven repayment options into a single plan with more lenient terms, allowing more borrowers to pay nothing until their income rises above certain limits. The plan also lowers payments, eliminates interest growth, and cancels unpaid debt in as little as 10 years. Borrowers who originally borrowed $12,000 or less are eligible for forgiveness after 10 years, while those who borrowed more than $12,000 will have a longer timeline for cancellation based on the amount borrowed.
The Biden administration has enrolled almost 8 million Americans in the SAVE Plan, with 4.5 million paying nothing due to lower incomes. Education Secretary Miguel Cardona emphasized that the plan provides relief to borrowers and prevents them from falling behind on their loans, allowing them to have some money back in their pockets. However, two lawsuits filed by Republican attorneys general in 18 states are challenging the plan’s legality, arguing that it goes beyond Biden’s authority and makes it harder for states to recruit employees. The lawsuits have not addressed the question of existing loan cancellations.
In addition to the SAVE Plan, Biden is pushing for a one-time student loan cancellation for more than 30 million borrowers in various categories. This proposal aims to help borrowers with large sums of unpaid interest, those with older loans, those who attended low-value programs, and those facing other hardships in repaying student loans. The administration plans to start waiving unpaid interest for millions of borrowers starting this fall, but conservative opponents have threatened to challenge this plan as well. The administration has also announced loan cancellations for 65,000 borrowers in older income-driven repayment plans and 5,000 borrowers through the Public Service Loan Forgiveness program.
Through various loan relief programs, the Biden administration has provided relief to 4.3 million people, totaling $153 billion. Despite legal challenges and opposition, the administration remains committed to providing support to borrowers struggling with student loan repayment. Biden’s efforts to address student loan debt and provide relief to millions of borrowers reflect his commitment to ensuring that higher education remains a pathway to the middle class and not a barrier to opportunity.
