Biden administration to forgive $4.8 billion in student loan debt

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U.S. President Joe Biden gestures as he delivers remarks on aid to Ukraine from the White House in Washington, U.S., December 6, 2023. 

Kevin Lamarque | Reuters

The Biden administration announced Wednesday that it would forgive an additional $4.8 billion in student loan debt, for 80,300 borrowers.

The relief is a result of the U.S. Department of Education’s fixes to its income-driven repayment plans and Public Service Loan Forgiveness program.

“Before President Biden took office, it was virtually impossible for eligible borrowers to access the student debt relief they rightfully earned,” U.S. Secretary of Education Miguel Cardona said in a statement. “This level of debt relief is unparalleled and we have no intention of slowing down.”

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More than $2 billion of the aid will go to nearly 46,000 borrowers enrolled in income-driven repayment plans. Those plans are supposed to lead to debt forgiveness after a set period, but this often didn’t happen because loan servicers failed to keep track of borrowers’ payments, experts say.

In addition, 34,400 borrowers who have worked in public service for a decade or more will receive $2.6 billion in loan cancellation, the U.S. Department of Education said. Borrowers in the Public Service Loan Forgiveness program have also struggled to get the debt erasure they’ve been promised due to errors in their payment counts and other issues.

The Biden administration has now cancelled nearly $132 billion in student debt for more than 3.6 million Americans.

Forgiveness may set Biden apart in election

The actions are likely to help President Joe Biden as he runs for reelection, said higher education expert Mark Kantrowitz.

“Biden has forgiven more student loan debt than any previous president,” Kantrowitz said. “It distinguishes him from other candidates.”

Republican nominees for president oppose student loan forgiveness.

Former New Jersey Gov. Chris Christie has said that Biden didn’t have the authority to cancel student debt without prior authorization from Congress.

“He knows he’s done something that is illegal and over the top,” Christie said on ABC’s “This Week” in 2022, shortly after Biden announced his sweeping debt forgiveness plan, which the Supreme Court ultimately rejected in June. At an estimated cost of about $400 billion, that plan would have been one of the most expensive executive actions in history. 

Former President Donald Trump sided with the Supreme Court.

“Today, the Supreme Court also ruled that President Biden cannot wipe out hundreds of billions, perhaps trillions of dollars, in student loan debt, which would have been very unfair to the millions and millions of people who paid their debt through hard work and diligence; very unfair,” Trump said at a campaign event in June.

Florida Gov. Ron DeSantis has said that it’s wrong to saddle taxpayers with the expense of student loan forgiveness.

“Why should a truck driver have to pay for somebody that got a degree in zombie studies?” DeSantis said at an Iowa event in early August. “It doesn’t make sense.”

Voters support forgiving at least some student loan debt by a 2-to-1 margin, according to a Politico/Morning Consult poll. Less than a third oppose the policy.



Source : CNBC