Biden administration to forgive $7.4 billion in student debt for another 277,000 borrowers
- The Biden administration announced Friday it was forgiving student debt for another 277,000 borrowers.
- After the Supreme Court struck down President Joe Biden's wide-scale debt cancellation plan, the president directed the U.S. Department of Education to examine its existing authority to reduce and eliminate students' debts.
- Mainly by improving current loan relief programs, the department has cleared the education debts of 4.3 million people, totaling $153 billion in aid, while Biden has been in office.
The Biden administration announced Friday that it will forgive $7.4 billion in student debt for 277,000 borrowers.
The latest round of loan cancellations is a result of the U.S. Department of Education's recent changes and improved oversight of income-driven repayment plans and the popular Public Service Loan Forgiveness program.
"As long as there are people with overwhelming student loan debt competing with basic needs such as food and healthcare, we will remain relentless in our pursuit to bring relief to millions across the country," U.S. Secretary of Education Miguel Cardona said in a statement.
More from Personal Finance:
Cash savers still have an opportunity to beat inflation
Should you refinance your mortgage?
Here's what's wrong with TikTok's viral savings challenges
Here is who benefits from this round of forgiveness
In this round of forgiveness, more than 206,000 borrowers will collectively get $3.6 billion in debt erased through the Biden administration's new Saving on a Valuable Education, or SAVE, plan, due to the provision that allows for debt forgiveness after shorter periods than other income-driven repayment plans for those who originally took out small amounts for college.
More than 65,000 borrowers will have their loans canceled through fixes to the Department of Education's income-driven repayment plans, and 4,600 borrowers are benefiting from the improvements to the government's loan forgiveness program for public servants. Aid for these groups in this round of forgiveness amounts to $3.5 billion and $300 million, respectively.
Biden's 2020 campaign promise to erase student debt was thwarted at the Supreme Court last June. The conservative justices ruled that Biden's $400 billion loan cancellation plan was unconstitutional.
After that, the president directed the Department of Education to examine its existing authority to reduce and eliminate students' debts. Mainly by improving current loan relief programs, the department has cleared the federal education loans of 4.3 million people, totaling $153 billion in aid, while Biden has been in office.
Relief is a result of fixes to federal student loan system
Income-driven repayment plans, which cap a borrower's monthly bill at a share of their discretionary earnings, are supposed to lead to debt cancellation after a certain period of time. However, loan servicers were not always keeping accurate track of borrowers' payments, advocates say. As a result, few people received the promised relief in the past.
The Biden administration has been reviewing borrowers' payment timelines and allowing them to get credit for periods that historically did not qualify, such as during certain deferments and forbearances.
It also rolled out a new income-driven repayment plan, the SAVE plan, in which borrowers with smaller loan balances can get debt forgiveness after as little as 10 years.
The Department of Education has been going over the accounts of borrowers pursuing Public Service Loan Forgiveness, too, trying to deliver more people relief under the program.
Previously, PSLF was famously complicated and excluded borrowers on technicalities, including their federal loan type, even if they were working a qualifying public service job. The Biden administration has loosened some of these rules.
The president also rolled out his wide-scale student loan forgiveness do-over plan earlier this week.