Biden cancels another $5B in student debt for borrowers in public service
Announced by the administration on Friday, the latest debt relief that affects teachers, nurses and firefighters comes on the heels of an announcement earlier this month fast-tracking the Saving on a Valuable Education (SAVE) plan.
“Nearly 44,000 of them are teachers, nurses, firefighters and other individuals who earned forgiveness after 10 years of public service, and close to 30,000 of them are people who have been in repayment for at least 20 years but never got the relief they earned through income-driven repayment plans,”
The Biden administration on Friday announced its latest incremental step to cancel student loan debt. Around 74,000 borrowers, many of them public employees, will receive $5 billion in relief under the latest program.
“Nearly 44,000 of them are teachers, nurses, firefighters and other individuals who earned forgiveness after 10 years of public service, and close to 30,000 of them are people who have been in repayment for at least 20 years but never got the relief they earned through income-driven repayment plans,” President Biden said in a statement. “My administration is able to deliver relief to these borrowers — and millions more — because of fixes we made to broken student loan programs that were preventing borrowers from getting relief they were entitled to under the law.”
The bulk of the cancellation, $3.2 billion, is derived from fixes to the Public Service Loan Forgiveness program, which allows borrowers who choose a career in government or nonprofit public service to have any remaining debt discharged after 10 years of repayments. The additional $1.7 billion in debt relief is the result of fixes to the federal income-driven repayment plan.
Both programs have been plagued by administrative issues that have delayed borrowers from receiving debt relief, which the Biden administration is now taking steps to fix. Borrowers on income-driven repayment plans are supposed to have them forgiven after a certain period of time, but experts cited said there often are issues that prevent that from happening, such as loan servicers losing track of repayments. It’s unclear when affected borrowers will formally have their loans forgiven.
The debt relief comes on the heels of a separate announcement last week by the administration that it is fast-tracking additional loan cancellation, originally set for July, through a new repayment plan, known as the Saving on a Valuable Education, or SAVE, Plan. Borrowers who originally took out $12,000 or less for college, have been making payments for at least 10 years and are enrolled in the plan can have their debts erased starting in February.
Friday’s announcement was the administration’s latest attempt to chip away at student debt. Biden announced an ambitious student loan forgiveness program in 2022, which would have forgiven $10,000 in federal student debt for borrowers earning less than $125,000 or $20,000 for Pell Gant recipients.
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The Supreme Court blocked the policy from taking effect, however, ruling that the administration had overstepped its authority in enacting the program, which it justified as being allowed under federal law because the impact of the pandemic. As a result, the White House instead has been forced to adopt a more piecemeal approach to debt relief, forgiving loans for smaller numbers of borrowers through targeted measures.