June 19, 2024
Loans

Biden Approves Another Nearly $5 Billion In Debt Relief For 74,000 Borrowers


Topline

The Biden administration announced Friday it’s canceling approximately $5 billion in student debt relief, largely for public servants, the latest incremental step the White House has taken on student loan forgiveness, even though its more ambitious student loan relief program was thwarted by the Supreme Court.

Key Facts

The administration approved debt relief for approximately 74,000 borrowers, the White House said Friday.

Of those 74,000, approximately 44,000 are public servants like teachers, nurses and firefighters who qualified for loan forgiveness after 10 years through the Public Service Loan Forgiveness program.

Another nearly 30,000 are borrowers on income-driven repayment plans who didn’t get the relief they earned.

Both programs have been plagued by administrative issues that have delayed borrowers from receiving debt relief, which the Biden administration is now taking steps to fix; borrowers on income-driven repayment plans are supposed to have them forgiven after a certain period of time, but experts cited by CNBC noted there are often issues that prevent that from happening, like loan servicers losing track of repayments.

Big Number

More than $136 billion. That’s the total amount of student debt the Biden administration has now canceled, according to government figures cited by multiple outlets, affecting approximately 3.7 million Americans. That still falls short of the $400 billion that would have been canceled had Biden’s more sweeping debt relief plan been allowed to take effect, however.

What To Watch For

It’s unclear when borrowers affected by the administration’s announcement Friday will formally have their loans forgiven. Though the White House has taken a number of steps on student loan relief, advocates have still urged it to go further, with nearly 70 organizations—including the NAACP, American Federation of Teachers and AFL-CIO—sending a letter Thursday to Education Secretary Miguel Cardona urging the administration to hold a fourth rulemaking session to determine further relief policies. The groups called on the Education Department to develop a “robust rule” designed to help borrowers who are experiencing “hardship,” including recent graduates, low-income borrowers, borrowers of color and borrowers with disabilities.

Key Background

Student loan relief has been a major priority for Democrats and President Joe Biden, who promised to cancel $10,000 in federal loans per borrower on the campaign trail. Biden announced an ambitious student loan forgiveness program in 2022, which would have forgiven $10,000 in federal student debt for borrowers earning less than $125,000, or $20,000 for Pell grant recipients. The Supreme Court blocked the policy from taking effect in June, however, ruling the administration had overstepped its authority in enacting the program, which it justified as being allowed under federal law due to the impact of the Covid-19 pandemic. As a result, the White House has instead been forced to adopt a more piecemeal approach to debt relief, forgiving loans for smaller numbers of borrowers through targeted measures like speeding up forgiveness for borrowers whose schools shut down, addressing issues with the income-based loan repayment program and improving application processes for disabled borrowers. Prior to Friday’s action, the administration most recently announced earlier in January that it would start canceling loans in February, ahead of schedule, for some borrowers who had less than $12,000 in loans.

Further Reading

Biden Cancels More Student Loans, Months Ahead Of Schedule (Forbes)

Biden Has Canceled About $132 Billion of Student Loans Despite Supreme Court Ruling. Here’s How. (Wall Street Journal)

Supreme Court Strikes Down Biden’s Student Loan Forgiveness (Forbes)

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