Northwest Arkansas Democrat-Gazette
US to cancel student loans for 206,000
WASHINGTON — 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.
The Department of Education announced the latest round of cancellations Friday in an update on the progress of its SAVE Plan. More people are becoming eligible for student loan cancellation as they hit 10 years of payments, a new finish line for some loans that’s a decade sooner than what borrowers faced in the past.
Casting a shadow over the cancellations, however, are two new lawsuits challenging the plan’s legality. Two groups of Republican-led states, fronted by Kansas and Missouri, recently filed federal suits arguing that the Biden administration overstepped its authority in creating the repayment option.
“From day one of my administration, I promised to fight to ensure higher education is a ticket to the middle class, not a barrier to opportunity,” President Joe Biden said in a statement. “I will never stop working to cancel student debt — no matter how many times Republican elected officials try to stop us.”
With the latest action, the Education Department has now approved cancellation for about 360,000 borrowers through the new repayment plan, totaling $4.8 billion.
The SAVE (Saving on a Valuable Education) Plan allows more borrowers to pay nothing until their income rises above certain limits. It also lowers payments more than past plans, eliminates interest growth and cancels unpaid debt in as little as 10 years.
Biden announced the plan in 2022 alongside his broader proposal for a one-time cancellation of up to $20,000 for more than 40 million people. While the one-time cancellation was struck down by the Supreme Court, the SAVE Plan moved forward and initially escaped legal scrutiny.
In two separate lawsuits, Republican attorneys general in 18 states are pushing to have the plan tossed and to halt any further cancellation. They say the SAVE Plan goes beyond Biden’s authority and makes it harder for states to recruit employees.
It’s unclear what the suits could mean for loans that have already been canceled. A court document filed by Kansas’ attorney general says it’s “unrealistic to think that any loan forgiveness that occurs during this litigation will ever be clawed back.”
The lawsuits don’t directly address the question, and the attorneys general didn’t immediately respond to an Associated Press request.
Along with the repayment plan, Biden is trying again at a one-time student loan cancellation. In a visit to Wisconsin on Monday, he highlighted a proposal to reduce or cancel loans for more than 30 million borrowers in five categories.
It aims to help borrowers with large sums of unpaid interest, those with older loans, those who attended low-value programs and those who face other hardships preventing them from repaying student loans. It would also cancel loans for people who are eligible for other forgiveness programs but haven’t applied.
On Friday, the administration also said it’s canceling loans for 65,000 borrowers who are enrolled in older income-driven repayment plans and hit the finish line for forgiveness. It also announced cancellation for another 5,000 borrowers through the Public Service Loan Forgiveness program.
Through a variety of programs, the Biden administration says it has now provided loan relief to 4.3 million people, totaling $153 billion.