The Biden administration announced on Friday that it is utilizing existing student loan forgiveness programs to cancel an additional $7.4 billion in student debt for 277,000 borrowers. This brings the total amount of student loan debt canceled under President Joe Biden to $153 billion for nearly 4.3 million individuals, which accounts for more than 9% of all outstanding federal student loan debt.
President Biden's administration has focused on making it easier for specific groups of borrowers, such as public sector workers, to qualify for loan forgiveness. Additionally, a new repayment plan called SAVE (Saving on a Valuable Education) has been launched to provide a shorter pathway to loan forgiveness for many low-income borrowers. This plan has faced legal challenges from Republican-led states, with some arguing that the cost is being shifted to taxpayers who did not attend college or have already paid off their loans.
The SAVE plan offers generous terms for low-income borrowers, with approximately $3.6 billion of the student debt relief announced recently set to be delivered to individuals enrolled in this program. The plan ties monthly payments to a borrower's income and family size, with some borrowers seeing their monthly payments halved once the plan is fully phased in this July.
One of the key benefits of the SAVE plan is the forgiveness component, where borrowers can have their remaining debt canceled after making monthly payments for a specified number of years. This forgiveness timeline is shorter compared to other income-driven repayment plans, with borrowers who initially borrowed $12,000 or less eligible for debt forgiveness after 10 years of payments.
Despite facing legal setbacks, President Biden has canceled more student loan debt than any other president by leveraging existing programs and implementing new initiatives. The Department of Education is also working to rectify administrative errors in past payments to bring individuals closer to debt relief.
The Biden administration is currently developing new proposals, based on different legal authority, to provide relief to specific groups of borrowers. These proposals, which could include wiping away accumulated interest for borrowers with larger loan balances, are expected to be finalized and potentially implemented as early as this fall.
