The Biden administration has announced the cancellation of $7.4 billion in student loan debt for 277,000 borrowers. This is part of a series of student loan forgiveness efforts that have been put in place under President Joe Biden. These efforts include making it easier for specific groups of borrowers to qualify for loan forgiveness and launching a new repayment plan that offers a shorter pathway to loan forgiveness for low-income borrowers. In total, the Biden administration has authorized the cancellation of $153 billion in student loan debt for nearly 4.3 million people, representing over 9% of all federal student loan debt.
Critics of Biden’s student loan forgiveness initiatives, mainly Republicans, argue that the cost is being shifted to taxpayers who did not attend college or who have already paid off their loans. They also accuse Biden of bypassing the Supreme Court, which previously struck down his signature student loan forgiveness program. In response to these criticisms, two groups of Republican-led states have sued the Biden administration over the income-driven repayment plan known as SAVE. This plan, which offers generous terms for low-income borrowers, has already seen nearly 8 million borrowers enroll with around 360,000 people benefiting from debt cancellation due to the plan’s terms.
The SAVE plan, introduced last year, offers income-driven repayment for borrowers that ties monthly payments to income and family size. Borrowers may see their monthly payments cut in half under this plan when fully phased in. There is also a forgiveness component where borrowers can have their debt forgiven after a certain number of years of making payments. Borrowers who initially borrowed $12,000 or less can have their debt forgiven after 10 years, compared to the 20-plus years it may take under other plans. Additionally, unpaid interest will not accrue as long as full monthly payments are made.
While Biden’s sweeping student loan forgiveness program was struck down by the Supreme Court in 2022, he has still managed to cancel more student loan debt than any other president by utilizing existing programs. The Department of Education is also conducting a recount of past payments to correct administrative errors and bring more people closer to debt relief. The Biden administration is working on new proposals, based on different legal authority, to provide relief to certain groups of borrowers. These proposals may include the elimination of accumulated interest for borrowers with larger loan balances than their initial borrowing amount and could go into effect as early as this fall.
Overall, the Biden administration has been actively working to provide student loan debt relief through a variety of initiatives and programs. Despite facing criticism from Republicans and legal challenges, these efforts have benefitted millions of borrowers by providing pathways to loan forgiveness and easing the burden of student debt. With more proposals in the works, the administration is committed to addressing the student loan debt crisis and helping borrowers move towards financial stability.
