Article Summary –
The Biden administration has announced an additional $7.4 billion in student loan cancellations for approximately 277,000 borrowers, with the total debt forgiven amounting to $153 billion, affecting around 4.3 million borrowers. The new round of cancellations applies to three categories of borrowers, with the majority of the forgiveness going to people who borrowed $12,000 or less and were enrolled in the administration’s income-driven repayment plan (SAVE). However, the plan has faced opposition from Republicans, with legal challenges from state-level officials and criticism from Congress.
Biden Administration Announces Additional Student Loan Cancellations
The Biden administration unveiled an extra $7.4 billion in student loan forgiveness for 277,000 borrowers last Friday, augmenting prior plans for substantial debt relief for millions of borrowers by autumn, dependent on new rules proposed by the White House.
Strategic Approach to Student Loan Forgiveness
This latest relief build on a White House strategy of implementing smaller, targeted measures for specific borrower subsets, in hopes of achieving significant results. This comes after a bigger plan to erase over $400 billion in debt was declined by the Supreme Court last year.
Simultaneously, President Biden is seeking to bolster support among young voters, many of whom are heavily burdened by skyrocketing education costs. Coupled with prior actions, Friday’s announcement brings the total forgiven debt to $153 billion, impacting about 4.3 million borrowers to date. The administration aims to forgive loans for an estimated 30 million total borrowers.
Details of the New Student Loan Cancellations
Education Secretary Miguel A. Cardona reported that assistance has been approved for roughly one in ten of the 43 million Americans with federal student loans. The new cancellations target three borrower categories who qualified under existing programs, with the majority of the forgiveness benefitting around 207,000 individuals who borrowed smaller amounts and participated in the administration’s SAVE repayment plan. The remaining loans will be forgiven through the Public Service Loan Forgiveness Program (PSLF) for those who have already made ten years of payments through public service.
Challenges Facing the Biden Administration’s Plans
Yet, the Biden administration’s plans have faced significant Republican opposition, with legal challenges arising from state officials and increasing protests in Congress. Economic studies suggest that the administration’s SAVE plan could cost the government up to $475 billion over the next decade. The U.S. government, already the largest lender to Americans financing their degree, would have to bear a larger share of these costs than before.
Despite opposition, more than eight million individuals enrolled in the SAVE plan, even as it faces challenges from Republican attorneys general. Republicans have expressed grievances over Biden’s student loan cancellation vision, criticizing it as unjust to borrowers who have struggled to repay their student debt without help.
Views on the Student Loan Cancellations
Michigan Republican Representative John Moolenaar critiqued the plan during a budget hearing, framing it as incentivizing loan default while penalizing those who repaid their loans. Secretary Cardona defended the plan, framing it as an essential fix to a broken system and pointing to improved repayment plans that could alleviate the need for future loan forgiveness.
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