Biden Forgives $9B Student Loans for 125K Borrowers

On Oct 5, 2023

Biden Forgives B Student Loans for 125K Borrowers

TL/DR –

The Biden administration announced that $9 billion of student loan debt would be erased for 125,000 borrowers, many of whom were already eligible for cancellation through programs such as Public Service Loan Forgiveness, income-driven repayment plans, or discharges for those with disabilities. The latest debt forgiveness breakdown includes $5.2 billion for 53,000 borrowers in eligible public service fields, nearly $2.8 billion for around 51,000 borrowers through adjustments to income-driven repayment plans, and $1.2 billion for nearly 22,000 borrowers with permanent disabilities. This move comes as part of the administration’s continued efforts to address the student loan crisis, with loan payments resuming after a three-year hiatus due to the pandemic.

The Biden administration cancels $9 billion in student debt

An additional 125,000 student loan borrowers will see $9 billion in student debt eliminated, announced the Biden administration on Wednesday. These borrowers were already eligible for cancellation viaPublic Service Loan Forgiveness, income-driven repayment plans, or discharges for individuals with disabilities.

Latest student loan cancellations

The White House breaks down the $9 billion debt forgiveness as: $5.2 billion for 53,000 borrowers in eligible public service sectors such as teaching or the military; almost $2.8 billion for nearly 51,000 borrowers through income-driven repayment plans adjustments; and $1.2 billion for nearly 22,000 borrowers with permanent disabilities identified through a Social Security data match.

These actions, described by Education Secretary Miguel Cardona as “efforts to fix the broken student loan system,” come as student loan payments resume following a three-year hiatus during the pandemic.

Despite the Supreme Court rejecting President Joe Biden’s original plan of providing up to $20,000 in loan forgiveness for most borrowers, his administration has managed to reduce student loan debt on a smaller scale.

Previous student debt cancellations

The White House touts having erased $127 billion in student debt, covering around 3.6 million Americans. This includes about 804,000 borrowers who have been paying down their loans for at least two decades and selected plans aligned with their income, but forgiveness at the end of all of that never came.

Among the 125,000 borrowers who will have their debt erased are another group in the same situation: they opted for income-driven repayment plans, paid on their loans for more than 20 years, and are now ready for their balances to be erased.

Overall, more than 40 million Americans possess student loan debt totalling about $1.7 trillion.

Future student debt relief?

This announcement precedes Biden’s second attempt at mass loan forgiveness. Next week, a committee made up of colleges, borrowers, state attorneys general, and student loan servicers will meet to discuss another potential strategy for erasing student loan balances on a vast scale.

In the meantime, borrowers are encouraged to apply for Biden’s new income-driven repayment plan, also known as Saving on a Valuable Education (SAVE). Under SAVE, borrowers who earn below a certain amount, as determined by family size, could see their payments set at $0.