The announcement – the latest in a series of cancellation efforts that span the last four years – brings the total amount of student loan debt relief under the Biden administration to $136.6 billion for more than 3.7 million borrowers.
“The Biden-Harris Administration has worked relentlessly to fix our country’s broken student loan system and address the needless hurdles and administrative inaccuracies that, in the past, kept borrowers from getting the student debt forgiveness they deserved,” Education Secretary Miguel Cardona said in a statement.
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The bulk of the student loan debt cancellation, $3.2 billion, is derived from fixes to the Public Service Loan Forgiveness program, which allows borrowers who choose a career in government or nonprofit public service, like teaching or nursing, to have any remaining debt discharged after 10 years of repayments. The additional $1.7 billion in debt relief announced on Friday is the result of fixes to the federal income-driven repayment plan.
“The nearly $5 billion in additional debt relief announced today will go to teachers, social workers, and other public servants whose service to our communities have earned them Public Service Loan Forgiveness, as well as borrowers qualifying for income-driven repayment forgiveness because their payments are for the first time being accurately accounted for,” Cardona said.
The debt relief comes on the heels of a separate announcement last week by the administration that it is fast-tracking additional loan cancellation – originally set for July – through a new repayment plan, known as the Saving on a Valuable Education, or SAVE, Plan. Borrowers who originally took out $12,000 or less for college, have been making payments for at least 10 years and are enrolled in the plan can have their debts erased starting in February.
“My Administration is able to deliver relief to these borrowers – and millions more – because of fixes we made to broken student loan programs that were preventing borrowers from getting relief they were entitled to under the law,” President Joe Biden said in a statement.
Despite the Supreme Court’s block of the president’s sweeping student loan cancellation plan last summer, providing debt relief to borrowers has been one of the administration’s biggest policy wins during Biden’s first term – and one the Biden-Harris campaign is prepared to tout heading into the 2024 presidential election.
In the wake of the high court’s decision to strike down the loan cancellation plan, Education Department officials hatched a new strategy to provide large-scale student loan debt cancellation. The plan, which would target certain groups of loan borrowers – including, among others, those whose balances are greater than what they originally borrowed, borrowers whose loans first entered repayment decades ago, and borrowers who attended programs that did not provide sufficient financial value – is currently in the throes of a lengthy regulatory process.
“In the wake of the Supreme Court’s decision on our student debt relief plan, we are continuing to pursue an alternative path to deliver student debt relief to as many borrowers as possible as quickly as possible,” Biden said in a statement.
“I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity – not unmanageable burdens of student loan debt. I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams.”