President Joe Biden announced his latest student loan forgiveness plan by canceling $7.7 billion in debts, taking the total amount of student loans canceled under his administration to $167 billion.
“Today, my Administration is canceling student debt for 160,000 more people, bringing the total number of Americans who have benefitted from our debt relief actions to 4.75 million,” President Biden said in a May 22 statement. “Each of those borrowers has received an average of over $35,000 in debt cancellation. These 160,000 additional borrowers are people enrolled in my administration’s SAVE Plan; are public service workers like teachers, nurses, or law enforcement officials; or are borrowers who were approved for relief because of fixes we made to Income-Driven Repayment (IDR).”
Out of $7.7 billion, $5.2 billion is relief granted to 66,900 borrowers under Public Service Loan Forgiveness (PSLF), a program for government and nongovernmental organization employees. Once a borrower has made 120 qualifying monthly payments on his or her debt, PSLF can forgive the remaining portion of the dues. In total, the Biden administration has approved $68 billion in forgiveness for more than 942,000 borrowers under PSLF.
$1.9 billion will go to provide relief to 39,200 borrowers through administrative adjustments made to individuals with IDR plans. The administration has so far approved $51 billion in IDR relief for more than 1 million borrowers.
The remaining $613 million in relief will be granted to 54,300 borrowers enrolled in the SAVE plan. Enrolled individuals can get relief if they’ve made payments for at least 10 years, provided they borrowed $12,000 or less. About $5.5 billion in loan forgiveness has been granted to 414,000 borrowers under the SAVE plan by the Biden administration.
With the latest announcement, the Biden–Harris administration has approved a total of $167 billion in loan forgiveness for 4.75 million Americans.
President Biden’s latest loan forgiveness comes less than six months before the presidential election. The issue of student loans remains high on the agenda of younger voters, many of whom have concerns about President Biden’s foreign policy on the war in Gaza and fault him for not achieving greater debt forgiveness.
In March, the campaign of former President Donald Trump, the presumptive Republican challenger to President Biden in the White House race, criticized the student loan cancellation as a bailout that was done “without a single act of Congress.”
U.S. Secretary of Education Miguel Cardona said the Biden administration “remains persistent about ... efforts to bring student debt relief to millions more across the country, and this announcement proves it.”
US Student Debt Burden
In June 2023, the Supreme Court voted to strike down the Biden administration’s massive student loan forgiveness program, which would have resulted in a government burden of about $800 billion or even more than $1 trillion, according to some estimates.President Biden criticized the SCOTUS decision. “They said no, no, literally snatching from the hands of millions of Americans thousands of dollars in student debt relief that was about to change their lives,” he said while promising to find a “new way” to circumvent the Supreme Court ruling.
In an interview with The Epoch Times, Caleb Kruckenberg, an attorney at Pacific Legal Foundation, warned that student debt forgiveness measures are a bad idea.
“We have a student loan system that assumes that people are going to pay their debt back, and instead, it’s just this massive government spending policy that has negative effects for everybody,” he said.
Last month, President Biden detailed a new proposal that would cancel at least some debt for more than 30 million Americans. It’s been in the works for months since the Supreme Court rejected his first try at mass debt cancellation.
The latest proposal is more targeted than his original plan, focusing on those for whom student debt is a major obstacle. The new plan uses a different legal justification—the Higher Education Act, which allows the secretary of education to waive student loan debt in certain cases.
The Education Department has been going through a federal rulemaking process to clarify how the secretary can invoke that authority.
The new plan targets five categories of borrowers, focusing on those believed to be in the greatest need of help. It would provide relief to an estimated 30 million borrowers. The administration has not said how much the plan would cost.
The widest-reaching provision aims to reset student loan balances for borrowers who have seen their debt grow because of unpaid interest.
It would cancel up to $20,000 in interest for Americans who now owe more than they originally borrowed. That cap wouldn’t apply to individuals who make less than $120,000 a year or couples who earn less than $240,000 and also are enrolled in an income-driven repayment plan.
Republicans have called President Biden’s student loan forgiveness approach an overreach of his authority and an unfair benefit to college-educated borrowers while other borrowers received no such relief.
As of the end of 2023, 43.2 million U.S. student loan recipients had more than $1.6 trillion in outstanding loans, according to the Federal Student Aid website, an office of the Department of Education. Higher education debt has tripled since the 2008 financial crisis.
