WASHINGTON – The Biden administration is canceling student loans for another 160,000 borrowers through a combination of existing programs.
The Department of Education announced the latest round of cancellations Wednesday, saying it will eliminate $7.7 billion in federal student loans. With the latest action, the administration said it has canceled $167 billion in student debt for nearly 5 million Americans through various programs.
“From day one of my administration, I have pledged to fight to ensure that higher education is a ticket to the middle class, not a barrier to opportunity,” President Joe Biden 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.”
The latest relief will go to borrowers in three categories who reach certain milestones that make them eligible for cancellation. It will go to 54,000 borrowers enrolled in Biden’s new income-driven repayment plan, along with 39,000 enrolled in previous income-driven plans, and about 67,000 who are eligible through the Public Service Loan Forgiveness program.
Biden’s new payment plan, known as the SAVE Plan, offers a faster path to forgiveness than previous versions. More people are now becoming eligible for loan cancellation once they reach 10 years of payments, a new finish line that is a decade earlier than what borrowers have faced in the past.
The cancellation is moving forward even as Biden’s SAVE Plan faces legal challenges from Republican-led states. A group of 11 states led by Kansas sued to block the plan in March, followed by seven more led by Missouri in April. In two federal lawsuits, the states say Biden needed to go through Congress to review federal reimbursement plans.
A separate action by the Biden administration aimed to correct earlier errors that delayed the cancellation of some borrowers enrolled in other repayment plans and through Public Service Loan Forgiveness, which forgives loans for people who make 10-year payments while working in public service jobs.
The Biden administration has been announcing new batches of forgiveness each month as more people qualify in these three categories.
According to the Department of Education, 1 in 10 federal student loan borrowers has been approved for some form of loan relief.
“One in 10 federal student loan borrowers approved for debt relief means one in 10 borrowers now has financial breathing room and a burden lifted,” Education Secretary Miguel Cardona said in a statement.
The Biden administration has continued to cancel loans through existing avenues while pushing for a new one-time cancellation that would provide relief to more than 30 million borrowers across five categories.
Biden’s new plan aims to help borrowers with large sums of unpaid interest, those with older loans, those who attended low-value college programs and those who face other difficulties that prevent them from repaying their student loans. It would also cancel loans for people eligible through other programs but who haven’t signed up.
The proposal is going through a lengthy rulemaking process, but the administration said it will accelerate certain provisions, with plans to begin waiving unpaid interest for millions of borrowers starting this fall.
Conservative opponents have also threatened to challenge that plan, calling it an unfair bonus for wealthy college graduates at the expense of taxpayers who did not attend college or who have already paid off their loans.
The Supreme Court rejected Biden’s previous attempt at a one-time recall, saying it exceeded the president’s authority. The new plan is being made with a different legal justification.
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