Biden Cancels Another $9 Billion In Student Loan Debt
Credit: Image Credit: Bloomberg / Getty Images- The Biden administration revealed Wednesday that fixes to existing loan forgiveness options resulted in $9.2 billion in loan discharges.
- The Department of Education has made a concerted effort to address shortcomings in student loan repayment plans.
- The announcement comes as millions of borrowers must resume loan payments after a three-year pause.
- Biden’s administration is also working on a new plan to offer widespread debt forgiveness.
The Biden administration on Wednesday announced another $9.2 billion in student loan discharges, three days after student loan repayments resumed following a three-year pause.
The Department of Education (ED) and the White House said that this latest round of loan forgiveness is possible through ongoing fixes to existing federal student loan repayment and forgiveness programs. That includes fixes to the Public Service Loan Forgiveness (PSLF) program, a one-time adjustment for borrowers on an income-driven repayment (IDR) plan, and cancellations for borrowers with a permanent disability.
Here’s how much ED canceled through each program:
- PSLF – $5.2 billion across 53,000 borrowers
- IDR – $2.8 billion across 51,000 borrowers
- Permanent disability discharge – $1.2 billion across 22,000 borrowers
An ED spokesperson told BestColleges that the IDR forgiveness amount comes from the one-time account adjustment. The PSLF figure includes all PSLF discharges since October 2021, while the permanent disability discharges are from a round of matches that took place “earlier this year.”
In total, the Biden administration has approved $127 billion in student loan debt forgiveness for nearly 3.6 million borrowers, according to the White House.
“For years, millions of eligible borrowers were unable to access the student debt relief they qualified for, but that’s all changed thanks to President Biden and this administration’s relentless efforts to fix the broken student loan system,” ED Secretary Miguel Cardona said in a statement. “Today’s announcement builds on everything our administration has already done to protect students from unaffordable debt, make repayment more affordable, and ensure that investments in higher education pay off for students and working families.”
The Biden administration made the announcement as millions of borrowers across the U.S. face the resumption of payments on their federal student loans for the first time since March 2020.
Approximately 28 million borrowers are expected to make a payment on their student loans in October 2023 now that the COVID-19 pause on payments and interest has ended. Interest began accumulating on student debt on Sept. 1.
A borrower’s credit score will not be impacted if they don’t make payments over the upcoming year, but interest will continue to accrue.
Biden in August 2022 unveiled his plan to forgive up to $20,000 in student loan debt per borrower, but the U.S. Supreme Court struck down the plan last June. His administration is in the process of formulating a new widespread relief plan through the process of negotiated rulemaking, which will kick off on Oct. 10.