Multiple Debt Relief Programs Tackle the “Broken Student Loan System”
The Biden administration has greenlit debt relief for an additional 125,000 student loan borrowers, totaling a substantial $9 billion in forgiveness. This announcement comes on the heels of federal student loan payments resuming after a pause lasting over three years. While the Supreme Court rejected President Biden’s signature student loan forgiveness program, which pledged up to $20,000 in debt relief for low- and middle-income borrowers, the administration remains committed to addressing the student loan crisis through alternative avenues.
Three Existing Debt Relief Programs
The approved cancellations result from three distinct existing debt relief programs, all of which have faced challenges in the past. The White House is actively addressing these issues as part of its ongoing efforts to mend what it calls a “broken student loan system.”
- Public Service Loan Forgiveness Program: Over 53,000 borrowers will benefit from debt cancellation under this program, which erases remaining student loan debt after qualifying public sector workers make ten years’ worth of monthly payments.
- Recount of Past Payments: Nearly 51,000 borrowers, who have been repaying their loans for at least 20 years, will receive relief through a recount of their prior payments. It has been determined that these borrowers already qualified for student loan forgiveness but were previously denied due to administrative errors.
- Automatic Debt Discharge for Disabled Borrowers: Approximately 22,000 borrowers with total or permanent disabilities will have their debts automatically discharged thanks to a data match with the Social Security Administration.
Also Read: Americans Student Loan Borrowers Face Resumption of Payments Amidst Mounting Debt Crisis
Biden’s Commitment to Debt Cancellation
With these newly approved discharges, the total debt cancellation during President Biden’s tenure amounts to $127 billion for nearly 3.6 million borrowers. Secretary of Education Miguel Cardona emphasized the administration’s dedication to rectifying the flawed student loan system. He asserted that these measures, building upon previous initiatives, protect students from crippling debt, ensure affordability in repayments, and safeguard the value of higher education for students and families.
Affordable Repayment Programs and Tuition Regulation
Beyond debt relief, the Biden administration has strived to make monthly student loan payments more manageable. A novel repayment program launched this summer aims to reduce bills for millions of borrowers. Additionally, a Department of Education rule set to take effect in the coming year intends to control tuition costs at for-profit colleges and career programs.
Pursuing Additional Pathways to Debt Relief
The administration continues its quest for alternative avenues to provide student debt relief. While the specifics of eligibility and debt cancellation amounts remain unclear, the Department of Education recently revealed plans for a potential new program targeting specific borrower groups, particularly those whose balances have grown beyond the initial borrowed amount despite regular payments. This pathway involves a formal rule-making process, which, while time-consuming, could still face legal challenges.
Biden’s Upcoming Announcement
President Biden is slated to provide an update on his administration’s efforts to address student debt later today, underscoring the ongoing commitment to tackling this pressing issue.