The Biden administration on Friday announced another expansion of the federal student debt relief program, declaring the cancellation of $7.4 billion in student loans for 277,000 Americans.
This initiative, unveiled on April 12, marks another move in the administration’s efforts to cancel student debt, totaling $153 billion in canceled debt for 4.3 million beneficiaries since taking office.
“This latest round of debt cancellation comes on the heels of President Biden announcing new plans that, if implemented, would cancel student debt for over 30 million Americans when combined with actions the Administration has taken over the last three years,” the White House said in a press release. “This week’s announcements reinforce the President’s commitment to using every path available to deliver student debt relief to as many borrowers as possible through various actions.”
The move is part of a broader strategy to provide relief to borrowers via multiple avenues, including reformed repayment plans and forgiveness programs.
Borrowers benefiting from Friday’s announcement include those enrolled in the Simplifying Access to Varied and Easy (SAVE) Plan and other Income-Driven Repayment (IDR) plans, as well as participants in the Public Service Loan Forgiveness (PSLF) program.
Last year saw the introduction of the SAVE Plan, which the administration touts as the most affordable repayment framework to date. Currently, the plan boasts enrollment figures of 8 million, with significant proportions of these participants paying minimal monthly sums, if any, according to the White House.
The administration is also pursuing new plans that, if implemented, would cancel student debt for tens of millions more.
Earlier Moves
In June 2022, the Supreme Court in a 6–3 decision overturned the Biden administration’s original loan forgiveness plan. That proposal aimed to cancel $430 billion in repayments related to student loan debt, which was expected to benefit up to 43 million Americans.“Some of my Republican friends, elected officials, and special interests sued, and the Supreme Court blocked us. But that didn’t stop us. ... We continue to find alternative paths to reduce student debt,” President Biden said in an event earlier this week.
The new plan would cancel runaway interest for millions of borrowers, as well as debt for borrowers who have been living with their student loans for 20 years or more for undergraduate loans and 25 years or more for graduate loans, according to the White House.
It would also automatically cancel debt for borrowers who qualify for forgiveness programs such as Saving on a Valuable Education, Public Service Loan Forgiveness, and others.
In addition, borrowers who are enrolled in low financial value programs and those who are experiencing financial difficulties will also benefit from the loan forgiveness policies in the Biden administration’s budget.
Earlier announcements will also provide the largest increases to the maximum Pell Grant in over a decade and ensure the effectiveness of the Public Service Loan Forgiveness for teachers, nurses, police officers, and other public service workers, according to the White House.
The administration said it’s also working to hold “colleges accountable for taking advantage of students and families.”
“We have studied the Supreme Court’s decision carefully. We intend to pursue these regulations in a way that is entirely consistent with that decision,” a senior administration official said in a press call earlier this week.
The new proposal differs from the administration’s previous debt relief plan and will be implemented using the U.S. Secretary of Education’s long-standing authority under the Higher Education Act, the official said.
“We’re not concerned about an inflationary effect,” the official said, adding that student debt relief will lead to “economic growth and economic mobility.”
