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Biden Administration Forgives $7.4 Billion More in Student Loans

from Investopedia, April 12, 2024

President Joe Biden’s changes to the rules of federal student loan programs has paid off for another batch of borrowers. 

In the latest round, 277,000 borrowers had $7.4 billion of debt forgiven, the Department of Education said Friday. The borrowers were granted forgiveness because of changes the Biden administration made to federal student loan programs including income-driven repayment plans and Public Service Loan Forgiveness (PSLF), and the new Saving on a Valuable Education (SAVE) repayment program.1Since taking office, Biden has forgiven $153 billion of loans for nearly 4.3 million borrowers, the White House said in a statement.2 Despite last year's defeat in the Supreme Court of Biden’s broad proposal to offer up to $20,000 of forgiveness per federal student loan borrower, the administration has forgiven loans to people in specific circumstances. Biden is also pursuing another broad forgiveness plan that could kick in next year if it survives legal challenges. 

“As long as there are people with overwhelming student loan debt competing with basic needs such as food and healthcare, we will remain relentless in our pursuit to bring relief to millions across the country,” U.S. Secretary of Education Miguel Cardona said in a press release. 

The forgiveness announced Friday went to borrowers in three groups:

  • $3.6 billion for about 206,800 people enrolled in the SAVE Plan, an income-driven repayment plan created by the Biden administration. Borrowers in the SAVE plan, like other income-driven plans, have debts forgiven if they pay a portion of their income for 20 or 25 years, or 10 years if they initially took out loans of $12,000 or less. The borrowers who had their loans forgiven Friday fell into the latter category.

  • $3.5 billion for 65,800 borrowers enrolled in income-driven repayment plans. The Department of Education has adjusted payment counts for borrowers on that type of plan, which includes SAVE as well plans that were first offered in the 1990s. The department gave borrowers additional credit toward forgiveness to make up for administrative errors on the part of companies that manage student loan payments on behalf of the government. 

  • $300 million for 4,600 borrowers in the PSLF program, which forgives student loans of people who work for government or nonprofit organizations for 10 years while making payments on their loans. The Biden administration changed the rules of that program to make it easier to qualify for. 

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