Biden administration cancels another $7.4 billion in student loans
Days after heralding its latest student debt forgiveness plan, the Biden administration is announcing another round of loan cancellation through existing debt relief programs.
The White House will send emails Friday to 277,000 borrowers informing them their debts - $7.4 billion in total are being canceled. As Election Day nears, the Biden administration has ramped up efforts to tout the president’s record on wiping clear the education debts of millions of Americans, despite Republican challenges to the efforts.
“This White House has been unapologetic in our efforts to deliver this relief,” Education Secretary Miguel Cardona said on a call with reporters Thursday. “Imagine the potential of this country if everyone can afford and access higher education. That’s why we’re engaged in this difficult work.”
The administration has regularly shared updates as it processes batches of debt relief. This latest round brings the total loan forgiveness approved by the president to $153 billion for nearly 4.3 million people, the administration says.
The lion’s share of the new relief will go to 206,800 borrowers enrolled in Biden’s Saving on a Valuable Education (Save) repayment plan, which ties monthly student loan payments to earnings and family size. Enrollees who borrowed less than $12,000 can have their debt wiped clean after 10 years of payments, compared to the traditional wait period of 20 to 25 years under other income-driven repayment plans. The Education Department has been identifying borrowers who meet that criteria since February.
The administration said another 65,700 borrowers who have been repaying their loans for more than 20 or 25 years also will have their balances canceled through a temporary waiver of the rules governing income-driven repayment plans. The IDR adjustment, unveiled two years ago, grants longtime borrowers credit toward loan forgiveness to rectify inconsistencies in how student loan servicers have treated and tracked payments. The remaining 4,600 people in line for debt cancellation in this latest tranche are public servants who benefit from the Public Service Loan Forgiveness program, which erases the balances of people who spend 10 years repaying their loans while in a government or nonprofit job.
The president is facing
two separate lawsuits from Republican attorneys general seeking to overturn the Save plan. The state leaders say the repayment program is a workaround to provide widespread debt relief that the Supreme Court struck down last year.
On Thursday, Biden officials said Save - an update of an existing income-driven repayment plan - is firmly anchored in law that gives the education secretary authority to revise such plans.
“Republican elected officials across 18 states want to prevent their own constituents from benefiting from the Save plan,” White House press secretary Karine JeanPierre
told reporters. “They want to make their constituents’ monthly payments go up and keep them under mountains of loan debt with no end in sight.”
Conservatives remain ardent critics of debt relief policies they say come at the expense of other taxpayers, many of whom never attended college or already repaid their school loans.
They have derided the Save plan as fiscally irresponsible and a ploy to deliver votes. A Penn Wharton budget model estimates that the Save plan will cost as much as $475 billion over a 10year period, while Biden’s new large-scale debt relief plan will cost another $84 billion.
Republicans also say the Biden administration should be more focused on cleaning up the disastrous rollout of the new Free Application for Federal Student Aid than student debt relief. Democrats and Republicans expressed frustration with the continued delays and errors in the financial aid form at a House hearing earlier this week, questioning whether the administration is doing enough to help students.
“We know that instead of doing its job the administration focused time, energy, and resources on its illegal student loan scheme,” Rep. Virginia Foxx (R-N.C.), the chairwoman of the House Education Committee, said in a statement. “And that has been frustrating, especially since it has jeopardized the academic journey of millions of students.”
Earlier this week, the president and members of his Cabinet fanned out across the country to promote the administration’s new plan to forgive some or all student loans for more than 30 million Americans. The plan is still being finalized, but the administration says it would deliver targeted cancellation to several categories of borrowers, including certain long-term borrowers or those experiencing financial hardships, such as high medical debt or child-care expenses. It would forgive up to $20,000 in interest for federal student loan borrowers whose balances have ballooned because of unpaid interest, a move that the White House estimates could benefit 25 million people.
The Biden administration has argued that its student debt cancellation policies have a wider benefit as borrowers freed of the debt burden can contribute to the economy. A recent report by the Council of Economic Advisers said the relief provided by student loan discharges and other actions taken by the administration could boost short-term consumption, homeownership and entrepreneurship.