Biden admin approves $5 billion more in student loan relief for 80K borrowers
WASHINGTON - The U.S. Department of Education has wiped out an additional $4.8 billion in student loan debt for more than 80,000 borrowers, bringing the total amount of student loan debt erased to $132 billion.
In a news release, the department said the new loan forgiveness stems from fixes to two loan programs: the income-driven repayment forgiveness and public service loan forgiveness.
Here’s the breakdown of the new round of forgiveness:
- $2.2 billion for nearly 46,000 borrowers through fixes to income-driven repayment that address concerns over misuse of forbearance and an accurate count of progress toward loan forgiveness. In all, the Biden administration has approved $44 billion in income-driven repayment relief for nearly 901,000 borrowers.
- $2.6 billion for 34,400 borrowers through public service loan forgiveness amid "ongoing regulatory improvements to the programs."
Students from George Washington University wear their graduation gowns outside of the White House in Washington, DC, on May 18, 2022. (Photo by STEFANI REYNOLDS/AFP via Getty Images)
Most borrowers in the latest round of loan forgiveness were notified in November.
MORE: Biden administration aims for narrower student loan relief plan
It’s the latest push from President Joe Biden’s administration to find other ways to eliminate student loan debt after the Supreme Court struck down his plan to cancel up to $20,000 in student loans for all borrowers.
Student loan payments resumed in October after a three-and-a-half-year pandemic pause.
What’s an income-driven repayment plan?
People rally in support of the Biden administration's student debt relief plan in front of the the U.S. Supreme Court on February 28, 2023 in Washington, DC. The Supreme Court struck down Biden's plan in June (Photo by Drew Angerer/Getty Images)
An income-driven repayment plan sets your monthly student loan payment at an amount that is meant to be affordable based on your income and family size. It takes into account different expenses in your budget, and most federal student loans are eligible for at least one of this type of plan.
Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. If your income is low enough, your payment could be $0 per month.
MORE: Here are the states with the most student loan debt
Last year, the Biden administration announced a new income-driven repayment plan — SAVE. The SAVE plan offers some of the most lenient terms ever. Under this plan, interest won’t pile up as long as borrowers make regular payments.
It’s still possible that the SAVE plan could face legal challenges similar to the one that led the Supreme Court in June to strike down Biden’s proposal for mass student loan cancellation.
"In the wake of the Supreme Court’s decision on our student debt relief plan, we are continuing to pursue an alternative path to deliver student debt relief to as many borrowers as possible as quickly as possible," Biden said in a prepared statement.
What’s the Public Service Loan Forgiveness Program?
People rally against the US Supreme Court's latest decisions to strike down President Biden's student loan forgiveness plan and race-conscious student admissions programs in Washington D.C., United States on Friday, June 29. (Photo by Celal Gunes/Ana
The Public Service Loan Forgiveness program is open to teachers, librarians, nurses, public interest lawyers, military members and other public workers.
It cancels a borrower's remaining student debt after 10 years of public interest work, or 120 monthly payments.
The Biden administration overhauled the program in 2021 amid complaints that public service loans were not being forgiven. After making a decade of payments, many borrowers found that they had the wrong type of federal loan or repayment plan to be eligible for the program. Thousands ended up stuck with debt they thought would be cleared.
What other student loans have been forgiven?
In addition to income-driven repayment and public service loan forgiveness, the Biden administration has also forgiven $11.7 billion for almost 513,000 borrowers with a total and permanent disability, and $22.5 billion for more than 1.3 million borrowers who were "cheated by their schools, saw their institutions precipitously close, or are covered by related court settlements."
The Associated Press contributed to this report.