The Biden administration in the United States is once again moving forward with a plan to forgive student loan debt for 160,000 borrowers through a combination of existing programs.
On Wednesday, the U.S. Department of Education announced the latest round of loan forgiveness initiatives, totaling $7.7 billion in federal student loans. The Biden administration stated that, including this latest action, they have forgiven $167 billion in student loan debt for nearly 5 million Americans through multiple programs.
This newest forgiveness plan will benefit three categories of borrowers. Among them, 54,000 individuals are enrolled in Biden’s new income-driven repayment plan, 39,000 are part of the early income-driven plan, and approximately 67,000 have qualified through the public service loan forgiveness program.
Biden has dubbed this new repayment plan the “SAVE Plan,” which offers a quicker pathway to loan forgiveness compared to previous versions. More individuals are now eligible to apply for loan cancellation after 10 years of repayment, a decade earlier than before.
The “SAVE Plan” faces legal challenges from Republican-led states. States like Kansas and seven others, including Missouri, have filed lawsuits in March and April this year in an attempt to block the plan, arguing that Biden needs congressional approval for comprehensive reform of federal repayment programs.
Despite these challenges, the Biden administration continues to advance its loan forgiveness initiatives. New rounds of forgiveness plans are announced monthly as the number of borrowers meeting the criteria for these three categories continues to increase.
According to the Department of Education, currently one out of every ten federal student loan borrowers is approved for some form of loan forgiveness.
While continuing to pursue loan forgiveness through existing channels, the Biden administration is also pushing for a new one-time loan forgiveness plan that will provide relief to over 30 million borrowers in five categories.
This new plan aims to assist borrowers with high outstanding interest, longer loan terms, attending low-cost universities, and those facing other difficulties preventing them from repaying their student loans.
The proposal is undergoing a lengthy process of rule-making, but the Biden administration has stated that certain provisions will be implemented faster, with plans to start forgiving unpaid interest for millions of borrowers starting in the fall of this year.
The proposal has faced opposition from conservatives who criticize it as an unfair reward to wealthy college graduates, at the expense of taxpayers who did not attend college or have already repaid their loans.
A previous one-time loan forgiveness plan by Biden was rejected by the Supreme Court for exceeding presidential authority, but this new plan is based on different legal grounds.