President Joe Biden said Wednesday his administration had approved the forgiveness of an additional $9 billion of student loans, extending relief to 125,000 borrowers through existing channels—after the U.S. Supreme Court’s rejection of the administration’s broad efforts at cancellation in June.
Those receiving forgiveness include borrowers in the Public Service Loan Forgiveness program, those who made 20 years or more of payments in an income-driven repayment plan but hadn’t yet gotten the relief they qualified for, and borrowers who have a total or permanent disability who have been identified and approved for discharge through a data match with the Social Security Administration.
“This kind of relief is life-changing for individuals and their families,” Biden said from the White House on Wednesday afternoon. It’s also beneficial for the economy, the president noted, as borrowers freed from their debts could go forward and buy houses, start businesses, and engage in other activities.
Wednesday’s announcement brings the total approved debt cancellation by the Biden administration to $127 billion for nearly 3.6 million borrowers, according to the White House. The volume of such cancellations will likely decrease over time as the administration continues to move through backlogs of eligible borrowers under the income-driven repayment plan and, to a lesser degree, the Public Service Loan Forgiveness program, says Mark Kantrowitz, a student-loan expert and author of How to Apply for More College Financial Aid.
This latest round of cancellations is separate from the administration’s new push to extend forgiveness to more of the country’s roughly 44 million federal student loan borrowers. Last week, the U.S. Dept. of Education advanced a proposal to forgive additional debt under the authority of the Higher Education Act.
Unlike the plan that the Supreme Court rejected, which was based on a pandemic-related emergency authorization, the new initiative will proceed through a so-called rule-making process that may not be finalized until 2025. It too remains vulnerable to legal challenges, Kantrowitz says.
A document released by the Education Department indicates the new proposal may target a narrower segment of borrowers than the prior proposal—including those whose loans entered repayment decades ago and those whose financial difficulties haven’t been adequately addressed by the student loan system.
These efforts come as federal student loan payments resume this month amid broad concerns about many borrowers’ ability to make their payments.
Write to Elizabeth O’Brien at [email protected]
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