The Biden administration on Wednesday announced it was providing student debt relief to 125,000 Americans, including individuals who’ve worked in public service or nonprofit positions, those who’ve been making payments for decades, and those with permanent disabilities.
This round of debt relief totals $9 billion and will eliminate the debt of 53,000 who’ve participated in the Public Service Loan Forgiveness (PSLF) plan, 51,000 borrowers who’ve made payments through an income-driven repayment (IDR) plan, and 22,000 borrowers with disabilities.
Those on an IDR plan have been making payments for at least 20 years, but never got the relief they were promised, according to the White House. The US Department of Education said in July that qualifying monthly payments that “should have moved borrowers closer to forgiveness were not accounted for,” effectively forcing these borrowers to make extra payments under their IDR plans.
Those getting relief under the Public Service Loan Forgiveness program include individuals who have been working in a government or nonprofit position, such as a teacher, firefighter, or police officer, for more than 10 years.
“My administration is doing everything we can to deliver student debt relief to as many as we can, as fast as we can. While a college degree is still the ticket toward a better life, that ticket has become excessively expensive,” Biden said in the Roosevelt Room at the White House on Wednesday. “Americans who are saddled with unsustainable debt in exchange for a college degree have become the norm.”
Biden: ‘It’s Good For Our Economy’
Wednesday’s announcement was just the latest round of student debt relief enacted by the Biden administration, which has fought to reduce the burden of federal student loan debt that has left many middle- and working-class borrowers financially underwater and unable to start businesses, buy homes, or retire.
“Fixing our broken student loan system doesn’t just get working folks breathing room – it’s good for our economy and our country,” the president added on Twitter.
Since Oct. 2021, 25,410 Michiganders have had $1.8 billion in student debt discharged via PSLF.
Additionally, nearly 29,000 Michiganders have been identified for debt relief due to changes to the Income Driven Repayment plans, as of mid-Sept. 2023.
“Seeing borrowers get the relief they were promised is exciting and fuels us to keep working tirelessly to end the student debt crisis,” the Student Debt Crisis Center, a group that advocates for student debt cancellation, said on Twitter.
Wednesday’s announcement comes just days after the Biden administration released its next steps in its broader effort to provide student debt relief following the US Supreme Court’s decision to strike down Biden’s student loan cancellation program in June.
The administration is looking into how to help borrowers whose current balances are higher than the figure they originally owed and who are eligible for relief under specific programs but didn’t apply. It’s also looking to help borrowers who are experiencing significant “financial hardship,” and those who went through programs that didn’t “give financial value,” though there’s no word yet on the specifics.
The Biden administration has taken several other steps to help borrowers since the Court’s decision in June, in a case filed by six Republican attorneys general who opposed Biden’s cancellation plan.
For example, nearly $42 billion in debt relief has been approved for roughly 855,000 borrowers who are eligible for forgiveness through income-driven repayment, but previously failed to get relief amid errors and inaccuracies in the program.
Additionally, almost $51 billion in debt relief has been approved for 715,000 public servants through various forgiveness programs. More than 500,000 borrowers with permanent or total disabilities have also received debt relief.
Finally, 1.3 million borrowers who were misled or defrauded by institutions such as the for-profit University of Phoenix, saw their institutions suddenly close, or who are covered by related court settlements have received relief.
In total, nearly 3.6 million Americans have received financial relief totaling over $100 billion—money that can instead be spent in their local communities, to start businesses and families, and more.
Options as Loan Repayments Resume
The Biden administration’s latest efforts come as student loan repayments resumed on Oct. 1, after a three-year, pandemic-induced pause.
To help borrowers successfully return to repayment, the Education Department has instituted a 12-month “on-ramp” to repayment, running from Oct. 1, 2023 to Sept. 30, 2024. Borrowers who miss a payment during this period will not be considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies, according to the White House.
The Biden administration also recently launched what it calls “the most affordable repayment plan ever created:” The Saving on a Valuable Education (SAVE) Plan, a new income-driven repayment (IDR) plan.
The SAVE Plan is available to most borrowers and purports to offer the lowest monthly payments of any IDR plan. The plan protects more income from payments and will cut monthly payments to $0 for millions of borrowers making $32,800 or less individually per year. The cutoff will be $67,500 per year for a borrower in a family of four.
Other borrowers will pay no more than 10% of their discretionary income—the difference between their adjusted gross income (AGI) and 225% of the federal poverty line for their family size—on payments. According to the Biden administration, many of these borrowers could save at least $1,000 per year under this plan.
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