The Biden administration announced an additional $7.4 billion in student loan cancellations for some 277,000 borrowers, following earlier plans to provide debt relief for millions of borrowers by the fall. This strategy involves smaller, targeted actions for subsets of borrowers, after a larger plan to wipe out over $400 billion in debt was struck down by the Supreme Court last year. The administration hopes to forgive some or all loans held by 30 million borrowers in total, with $153 billion in debt already forgiven, benefitting around 4.3 million borrowers. The latest round of relief aims to address the soaring education costs affecting young voters, potentially shoring up support for President Biden amid concerns over his policies on Israel and the war in Gaza.
The new round of student loan cancellations involves three categories of borrowers who qualified under existing programs. The bulk of the forgiveness will go to around 207,000 people who borrowed $12,000 or less and were enrolled in the administration’s income-driven repayment plan, called SAVE. Another 65,000 borrowers will see reductions in what they owe through adjustments correcting administrative and servicing failures, while the remaining group will have their loans forgiven through the Public Service Loan Forgiveness Program. These actions are based on established laws, such as the Higher Education Act, to address specific groups of borrowers who qualify for cancellation.
The administration’s approach reflects a piecemeal strategy following the Supreme Court’s rejection of large-scale loan forgiveness. The administration is identifying specific groups of borrowers who qualify for relief under existing laws, with plans to forgive some amount of debt for 25 million borrowers if the rules announced on Monday are finalized after a summer comment period. Although the SAVE program could cost the government as much as $475 billion over the next decade according to economic analyses, the administration believes that better repayment plans are in place to prevent the need for large-scale loan forgiveness in the future.
Republican opposition to President Biden’s student debt cancellation plans has been strong, with legal challenges arising from state-level officials and growing outcry in Congress. Some Republicans argue that forgiving student loans incentivizes not paying back the debt and penalizes individuals who did not receive assistance. However, Education Secretary Miguel A. Cardona defends the need for loan forgiveness, stating that the administration is addressing a broken system and has implemented better repayment plans to prevent the need for future forgiveness. Despite challenges, over eight million people had already enrolled in the SAVE program as of Friday.
The SAVE plan has faced challenges from Republican attorneys general, with concerns raised over the government shouldering a larger portion of the costs associated with student loans. Republicans in Congress have criticized President Biden’s vision for student debt cancellation as unfair to borrowers who struggled to pay off their loans without assistance, arguing that those who paid off their loans are being penalized to support those who did not. The administration remains committed to addressing the student debt crisis and providing relief to borrowers, even as opposition from Republicans continues. Ultimately, the administration’s goal is to alleviate the financial burden of student loans for millions of borrowers and create a more equitable system for higher education financing.
