President Joe Biden on May 22 announced the cancellation of an additional $7.7 billion in student loans for 160,000 Americans in the nation’s ongoing efforts to relieve soaring college debt.
The move is the latest effort by the President to help struggling college graduates who face high student loan debt. The announcement also comes as Biden courts young voters who are weary of supporting his re-election bid for a second term as his approval ratings lag.
Blacks historically have had more student loan debt than any ethnic group. It’s unclear how many Black borrowers are affected by Biden’s latest move. In April, the White House announced another round of cancellations, totaling $7.4 billion for 277,000 borrowers and declared a new group of student debt relief proposals that could go into effect this fall.
White House officials said Wednesday’s addition brings the total number of Americans who have had loans canceled to 4.75 million, relieving an average student debt of over $35,000.
Borrowers affected by the administration’s newest cancellation were approved through the Biden administration’s SAVE Plan, other income-driven repayment programs or Public Student Loan Forgiveness for qualifying public service workers.
“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,” the President 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.”
Of the borrowers affected by Wednesday’s announcement, 66,900 borrowers — who saw $5.2 billion forgiven — qualified through the Public Service Loan Forgiveness program, bringing the total amount forgiven for borrowers enrolled in the program that aids teachers, nurses and other public service workers to $68 billion.
The more than 54,000 borrowers enrolled in the SAVE plan who took out smaller loans for graduate studies received $613 million in relief. And an additional 39,200 borrowers who are enrolled in income-driven repayment programs had $1.9 billion relieved.
In recent months, the Biden administration has been working on a set of new proposals, based on a different legal authority, to deliver relief to certain groups of borrowers.
For example, those whose student loan balances are bigger than what they initially borrowed could see their accumulated interest wiped away.
These proposals have yet to be finalized, but administration officials have said that some could take effect as soon as this fall.
With the presidential election six months away, Biden’s administration has been eager to highlight progress in its debt cancellation programs, making announcements such as this one nearly once a month.
Biden has faced blowback from Republicans who accuse the administration of transferring the burden to taxpayers and undermining the Supreme Court, which blocked the White House’s Student Loan Forgiveness plan last year.
Who qualifies for loan forgiveness?
The Biden administration said there are three groups of borrowers who have been approved for forgiveness in the latest round.
- 66,900 borrowers will have $5.2 billion forgiven through the Public Service Loan Forgiveness program, which is designed to help public servants such as teachers, nurses and law enforcement officers get their debt canceled after 10 years of repayments.
- 54,300 borrowers will have $613 million forgiven through the SAVE plan.
- Another 39,200 borrowers will have $1.9 billion forgiven through adjustments to their income-driven repayment plans. These plans were sometimes mismanaged by loan servicers, which made it more difficult for some borrowers to achieve forgiveness.
How will I know if I qualify for forgiveness?
- The Biden administration said that people who qualify under this latest round of debt cancellation will get an email about their approval.
- The debt cancellation will then be processed in the next few weeks, it added.
Does Biden plan to offer more student loan forgiveness?
- Yes, because the Biden administration is working on a new effort to provide broad-based loan forgiveness through the Higher Education Act.
- The new plan could provide relief to about 30 million borrowers, either erasing some or all of their college loans.
- The Biden administration on Wednesday said the public comment period on the new regulation closed on May 17, with the Department of Education now reviewing the thousands of comments it received.
- “Our goal is to publish a final rule that results in delivering relief this fall,” the Education Department said in the Wednesday statement.
How can borrowers sign up for SAVE? • The SAVE plan is open for enrollment here.
- The income-driven repayment plan bases monthly payments on income and family size, with some lower-income households with more family members paying little to nothing each month. For instance, a family of four with less than $50,000 in annual income would have monthly payments of $0.
- Another benefit to the program is that it eliminates snowballing interest. In previous plans, borrowers sometimes saw their balances grow if their monthly payments didn’t cover all their interest, a financial situation called “negative amortization.” That’s why some borrowers may have left college with, say, $20,000 in debt but ended up with much larger balances even after years of repayment.
