The Biden administration announced on Wednesday that it will forgive $7.7 billion in student loans for over 160,000 borrowers as part of its ongoing efforts to reduce the burden of education debt.
Biden Student Loan Forgiveness
The Biden Student loan forgiveness relief comes from the US Department of Education’s income-driven repayment plans and enhancements to the Public Service Loan Forgiveness program.
Education Secretary Miguel Cardona said on Biden Student loan forgiveness that the Biden-Harris Administration is committed to bringing student debt relief to millions more across the country.
The Biden Student loan forgiveness plan announced on Wednesday included $5.2 billion for 66,900 borrowers in the Public Service Loan Forgiveness program and $1.9 billion for 39,200 people in income-driven repayment plans.
Another $613 million will help 54,300 borrowers through the Biden administration’s new income-driven repayment option. This new plan is known as the Saving on a Valuable Education (SAVE) plan. Biden’s student loan relief offers loan forgiveness after 10 years for those who initially borrowed $12,000 or less.
The Biden-Harris Administration aims to reform the student loan system to make education more affordable and accountable. The US Department of Education introduced the new income-driven repayment (IDR) plan, Saving on a Valuable Education (SAVE) plan.
Biden’s student loan relief reduces payments by half for undergraduate loans compared to other IDR plans. It also prevents loan balances from growing if payments are made, giving more income for basic needs. Single borrowers earning less than $15 an hour will not need to make payments. Borrowers on the current REPAYE plan will automatically switch to the SAVE plan.
Biden’s Future Plans for Student Loan Relief
The Biden student loan forgiveness plan has reached a total of $167 billion. After the Supreme Court’s rejection of President Joe Biden’s student loan relief plan last summer, the White House has been searching for ways to reduce borrowers’ balances using existing authority. One area they have focused on is the Education Department’s existing but not used loan forgiveness options.
This announcement brings the total debt forgiven by the Biden administration to $167 billion for 4.75 million borrowers. Most of this comes from improving and extending existing programs.
The Biden administration has been reviewing the loan accounts of millions of borrowers to conclude if their debts should have been forgiven.
They have also provided borrowers consolidating loans with a one-time payment count adjustment. This gives them credit for all their loans based on the one with the longest payment history. This plan helped almost 1 million people, receiving almost $50 billion in debt cancellation.
Most federal student loan holders qualify for income-driven repayment plans. However, some may need to request loan consolidation by June 30 to receive the administration’s account adjustments.
Consumer advocates say borrowers have always struggled to understand these help options. The public has often found them difficult or even impossible to navigate, and many borrowers have complained about not receiving the relief they were entitled to.
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