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Biden Administration Announces New Plan to Forgive $9 Billion of Student Loan Debt

Officials say the debt forgiveness was made possible through 'fixes' to the income-driven repayment and Public Service Loan Forgiveness programs

The Biden Administration has announced a new plan to forgive $9 billion in student loans.

According to the federal government, President Joe Biden has now forgiven a total of $127 billion in student loan debt for 3.6 million people in the United States. Notably, his previous loan forgiveness plans have been challenged in court and the Supreme Court rejected his large-scale plan over the summer.

“President Biden has long believed that college should be a ticket to the middle class, not a burden that weighs on families,” said the White House in a statement on Oct. 4. “That’s why from day one, his Administration has taken unprecedented steps to fix the broken student loan system, make college more affordable, and bring the promise of higher education in reach for more Americans.”

The new student loan debt forgiveness program aims to erase $9 billion of debt for 125,000 Americans through “fixes” to income-driven repayment (IDR) and Public Service Loan Forgiveness.

The White House says 53,000 people have not been forgiven $5.2 billion in student loan debt under the Public Service Loan Forgiveness program. The program cleared student loan balances for Americans who work in public service provided they have worked for 10 years and made 120 qualifying payments.

Another 51,000 people who made “made 20 years or more of payments” on student loan debt but have not been impacted by other forgiveness are being collectively forgiven $2.8 billion of debt through IDRs. Finally, collective debt forgiveness for 22,000 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” will total $1.2 billion.

Student loan payment, which was paused during the COVID-19 pandemic, resumed on Oct. 1 after a three-year hiatus. Interest on the loans restarted on Sept. 1. 

Biden, who campaigned on the promise of student loan debt forgiveness, has unveiled multiple efforts to wipe borrowers’ debts since taking office.

In June, the Supreme Court rejected the Biden administration’s plan to forgive up to $20,000 of debt for low-income students who were Pell Grant recipients as well as up to $10,000 for a wide grouping of other borrowers. Some estimates indicated the program would have canceled $430 billion of federal student loan debt. Citing the same 2001 law that President Donald Trump used to pause the payments, Biden said federal law gave the secretary of education the power to “alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies.”

Six states challenged the Biden administration, arguing he had overstepped his authority. Ultimately, the Supreme Court found the administration had incorrectly applied the law and that the Department of Education could not cancel the debt.

 The authority to ‘modify’ statutes and regulations allows the Secretary to make modest adjustments and additions to existing provisions, not transform them,” wrote Chief Justice John Roberts for the 6-3 majority, per NPR.

Student loan debt is expected to remain a prominent issue during the 2024 presidential election as Biden looks to win liberal voters with the promise of debt cancelation.

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