Yahoo Finance Biden Announces Another $7.7 Billion in Student Loan Cancelation
The Biden administration announced Wednesday that it is canceling another $7.7 billion in student loans held by 160,000 borrowers.
The latest round of debt cancellation means the administration has now forgiven $167 billion worth of student loans, in an effort that the White House says has benefited 4.75 million people, or more than 10% of all those with student loan debt in the U.S. On average, each debtor has received roughly $35,000 in forgiveness.
In a statement, President Joe Biden touted his long-running campaign to cancel student debt, which includes a massive effort potentially benefiting 40 million people that was shot down by the Supreme Court last year. He also highlighted the politics involved in student loan forgiveness. “I promised to fight to ensure higher education is a ticket to the middle class, not a barrier to opportunity,” he said. “I will never stop working to cancel student debt — no matter how many times Republican elected officials try to stop us.”
The loans being canceled are associated with three loan programs. The largest batch, valued at $5.2 billion, will go toward 66,900 borrowers currently in the Public Service Loan Forgiveness program, which cancels loans for debtors who work in public service jobs and make loan payments for 10 years.
Another 54,300 borrowers in the Saving on a Valuable Education repayment plan, known as SAVE, will also receive debt forgiveness, worth $613 million. Under new rules imposed by the Biden administration earlier this year, borrowers in the SAVE program who owe less than $12,000 are now eligible for forgiveness after making payments for 10 years.
The third group receiving debt forgiveness is 39,200 borrowers who have been making payments on their student loans for at least 20 years. Those loans are valued at $1.9 billion.
What comes next: The Biden administration is pushing ahead on student loan cancelation despite legal challenges. Eleven states led by the Republican attorneys general in Kansas and Missouri have sued to block the cancellations, in cases that are still pending. The suits claim that the Biden administration lacks the authority to unilaterally forgive billions of dollars in student loan debt.
In April, the White House unveiled a proposal for a sweeping new loan forgiveness program that could benefit upwards of 30 million borrowers. The proposal is still in the rule-making process, but the administration reportedly wants to move ahead with it in the fall. If enacted, the new loan forgiveness program will likely be greeted by another round of legal challenges.
