The Biden administration announced on Friday that it will forgive $7.4 billion in student debt for 277,000 borrowers, marking the latest round of loan cancellations stemming from changes and enhanced oversight of income-driven repayment plans and the Public Service Loan Forgiveness program by the U.S. Department of Education.
“As long as there are people with overwhelming student loan debt competing with basic needs such as food and healthcare, we will remain relentless in our pursuit to bring relief to millions across the country,” U.S. Secretary of Education Miguel Cardona said in a statement.
Under this initiative, more than 206,000 borrowers will collectively have $3.6 billion in debt erased through the Biden administration’s new Saving on a Valuable Education (SAVE) plan, which allows for debt forgiveness after shorter periods than other income-driven repayment plans for those who initially borrowed small amounts for college.
Additionally, over 65,000 borrowers will benefit from cancellations made possible through fixes to the Department of Education’s income-driven repayment plans, while 4,600 borrowers will receive relief under improvements to the government’s loan forgiveness program for public servants. The aid for these groups amounts to $3.5 billion and $300 million, respectively.
President Biden’s campaign pledge to eliminate student debt was thwarted at the Supreme Court last June when conservative justices ruled his $400 billion loan cancellation plan unconstitutional. Subsequently, the president directed the Department of Education to explore its existing authority to reduce and eliminate students’ debts, resulting in the clearance of federal education loans for 4.3 million people totaling $153 billion in aid during Biden’s tenure.
Advocates have highlighted issues with income-driven repayment plans, noting that loan servicers often failed to accurately track borrowers’ payments, leading to limited relief in the past. The Biden administration has addressed these concerns by reviewing borrowers’ payment timelines, ensuring credit for periods that historically did not qualify, such as during deferments and forbearances, and introducing the SAVE plan, which offers debt forgiveness after as little as 10 years for borrowers with smaller loan balances.
Furthermore, efforts have been made to streamline the Public Service Loan Forgiveness (PSLF) program, which was previously complex and excluded borrowers on technicalities. The Biden administration has relaxed some of these rules to expand access to loan forgiveness for those in qualifying public service roles.
Earlier this week, President Biden unveiled a comprehensive plan to overhaul student loan forgiveness measures.
