President Biden Cancels Additional $7.7bn in Student Loans

The US Education Department announced on Wednesday that more than 160,000 student loan holders would have their loans erased.

The agency noted that this adds to the $167 billion in debt forgiveness awarded by President Joe Biden’s administration.

As the election approaches, Biden is emphasizing his administration’s accomplishment in forgiving loans for roughly 4.8 million borrowers through a variety of programs and policies.

Republicans have opposed the program, claiming that it is an unreasonable use of taxpayer cash and unfair to individuals who did not attend college.

“I promised to fight to ensure higher education is a ticket to the middle class, not a barrier to opportunity,” Biden said in a statement Wednesday. “I will never stop working to cancel student debt — no matter how many times Republican elected officials try to stop us.”

The majority of the new $7.7 billion in relief will go to 66,900 public employees who benefit from the Public Service Loan Forgiveness program, which wipes off the balances of persons who repay their debts for ten years while working for the government or a nonprofit organization. By temporarily simplifying the program’s rigorous criteria in 2022, the Biden administration made it easier for hundreds of thousands of debtors to seek for forgiveness.

An additional 54,300 borrowers registered in Biden’s Saving on a Valuable Education (SAVE) repayment plan, which links monthly student loan payments to wages and family size, will have their amounts cleared. Enrollees who borrowed less than $12,000 can have their debt canceled after just 10 years of payments, as opposed to the 20 to 25 years required by other income-driven repayment schemes.

The remaining debt relief will benefit 39,200 borrowers who have been repaying their debts for more than 20 or 25 years.

These debtors are taking advantage of a temporary suspension of the regulations governing income-driven repayment arrangements, known as the IDR adjustment.

The waiver gives long-term borrowers credit toward loan forgiveness to correct anomalies in how student loan servicers have processed and recorded payments.

This month, the government said that it would allow borrowers with older bank-based federal loans extra time to consolidate and take advantage of the change.

“One out of every 10 federal student loan borrowers approved for debt relief means one out of every 10 borrowers now has financial breathing room and a burden lifted,” Education Secretary Miguel Cardona said in a statement Wednesday.

Conservatives continue to criticize Biden’s loan forgiveness policies. Republican attorneys general filed two lawsuits to challenge the SAVE repayment plan, accusing Biden of attempting to grant broad debt cancellation despite the Supreme Court’s ruling against a similar policy last year. A group of congressional Republicans wrote to Cardona on Friday, urging him to rescind a planned regulation that would cancel some or all student debts for more than 30 million Americans, calling it a “reckless” wealth transfer.

Elaine Parker, president of the Republican Job Creators Network Foundation, said on Wednesday that the new batch of loan cancellations is “lawless and defies the Supreme Court and Congress.”

“It is merely a vote-buying exercise,” said Parker, whose foundation was among the groups that sued in 2022 to block Biden’s plan to forgive up to $20,000 in student loans for some borrowers.

“Taxpayer forgiveness of college debt only exacerbates the student loan crisis by giving colleges a blank check to continue overcharging students.”

The Biden administration is confident that student loan cancellation improves the overall economy.

According to an April analysis from the Council of Economic Advisers, student debt discharges and other moves taken by the administration could promote short-term consumption, homeownership, and entrepreneurial activity.

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