White House says $7.4B more in student loans are canceled
WASHINGTON — The Biden administration announced an additional $7.4 billion in student loan cancellations for some 277,000 borrowers Friday, building on plans announced this week to provide debt relief for millions of borrowers by the fall if new rules the White House has put forward hold.
The latest round of relief reflects a strategy the White House has embraced by taking smaller, targeted actions for subsets of borrowers that it hopes will add up to a significant result, after a larger plan to wipe out more than $400 billion in debt was struck down by the Supreme Court last year.
It also comes as President Joe Biden aims to shore up support with young voters who may be disproportionately affected by soaring education costs, but who may be drifting away over his policy on Israel and the war in the Gaza Strip.
Taken together with previous actions, the announcement Friday brought the total to $153 billion in debt forgiven, touching around 4.3 million borrowers so far, the administration said. The administration hopes to forgive some or all loans held by some 30 million borrowers total. The administration said the 277,000 people it identified would be notified by email Friday.
“We’ve approved help for roughly 1 out of 10 of the 43 million Americans who have federal student loans,” Miguel Cardona, the education secretary, told reporters before the announcement.
The new round of cancellations involves three categories of borrowers who qualified under existing programs, with the bulk of the forgiveness going to around 207,000 people who borrowed relatively small amounts — $12,000 or less — and were enrolled in the administration’s income-driven repayment plan, known as SAVE.
An additional 65,000 enrolled in repayment plans will see reductions in what they owe through adjustments
correcting what Cardona described as “administrative and servicing failures.” The remaining group would see their loans forgiven through the Public Service Loan Forgiveness Program, having already qualified after making 10 years of payments while engaging in public service.
Administration officials have said they studied the Supreme Court’s decision rejecting large-scale loan forgiveness and are taking a piecemeal approach that identifies specific groups of borrowers who qualify for cancellation under established law, such as the Higher Education Act.
If the administration’s rules announced Monday are finalized after a comment period that could stretch through the summer, Biden has said 25 million borrowers could see some amount of forgiveness — including those whose interest payments surpassed the amount they originally borrowed, and others who were cheated or defrauded by their schools.
But Republican opposition to Biden’s plans has been pronounced, with legal challenges mounting from state-level officials and an outcry growing in Congress.
Economic analyses have suggested that the administration’s SAVE plan could cost the government as much as $475 billion over the next decade.
The U.S. government is already the largest lender to Americans borrowing to pay for college, and the plan requires the government to shoulder a larger amount of those costs than it has in the past.
The SAVE plan is facing two challenges from Republican attorneys general even as the White House announced that more than 8 million people had enrolled as of Friday.
Republicans in Congress have seized on the announcements this week to restate grievances over Biden’s vision for student debt cancellation, which they have often characterized as unfair to borrowers who struggled to pay off their student debt without assistance.
“You’re incentivizing people to not pay back student loans and at the same time penalizing and forcing people who did to subsidize those who didn’t,” Rep. John Moolenaar, R-mich., said during a hearing Wednesday, in which Cardona testified about the Education Department’s budget request for next year.
“I don’t see it as unfair. I see it as we’re fixing something that’s broken,” Cardona said. “We have better repayment plans now so we don’t have to be in the business of forgiving loans in the future.”