Biden-Harris Administration Announces Additional $7.7 Billion in Student Debt Relief

Original News Story:

On May 21, 2024, the Biden-Harris Administration announced the approval of $7.7 billion in additional student loan debt relief for 160,500 borrowers. This relief is targeted at three main categories: Public Service Loan Forgiveness (PSLF), President Biden’s Saving on a Valuable Education (SAVE) Plan, and income-driven repayment (IDR) forgiveness due to administrative fixes. This action brings the total loan forgiveness approved by the Biden-Harris Administration to $167 billion for 4.75 million Americans.

"One out of every 10 federal student loan borrowers approved for debt relief means one out of every 10 borrowers now has financial breathing room and a burden lifted," said U.S. Secretary of Education Miguel Cardona.

Breaking Down the Relief Package:

1. Public Service Loan Forgiveness (PSLF):

• Amount: $5.2 billion
• Beneficiaries: 66,900 borrowers
• Total Relief under PSLF: $68 billion for over 942,000 borrowers

The PSLF program offers loan forgiveness to borrowers who have worked in public service and made qualifying payments for 10 years. The recent administrative fixes have ensured that more borrowers are now eligible for forgiveness.

2. Saving on a Valuable Education (SAVE) Plan:

• Amount: $613 million
• Beneficiaries: 54,300 borrowers

The SAVE Plan targets borrowers with smaller loans. Those who have borrowed $12,000 or less can receive forgiveness after making 10 years of payments, with each additional $1,000 in borrowing adding 12 more months until forgiveness. All borrowers on the SAVE Plan are eligible for forgiveness after 20 or 25 years, depending on whether they have loans for graduate school.

3. Income-Driven Repayment (IDR) Adjustments:

• Amount: $1.9 billion
• Beneficiaries: 39,200 borrowers
• Total Relief under IDR: $51 billion for over 1 million borrowers

These adjustments address long-standing issues with forbearance misuse by loan servicers, ensuring that borrowers get credit for progress made toward forgiveness.

Broader Impact:

The Biden-Harris Administration's efforts to provide student debt relief are part of a broader strategy to reduce the financial burden on borrowers and ensure that student loans do not become a barrier to opportunities. The relief measures are expected to boost short-term consumption and have positive effects on borrower mental health, financial security, and outcomes such as homeownership and entrepreneurship.

"Today we are helping 277,000 borrowers who have been making payments on their student loans for at least a decade," said U.S. Under Secretary of Education James Kvaal.

New Plans for Debt Relief:

In addition to the current relief measures, the Biden-Harris Administration has proposed new plans to provide student debt relief to tens of millions of borrowers. These proposals include waiving accrued and capitalized interest for millions, automatically discharging debt for eligible borrowers, and eliminating student debt for those who entered repayment 20 or more years ago. Public comments on these plans are currently being reviewed, with a final rule expected to be published this fall.

Conclusion

The Biden-Harris Administration's recent approval of $7.7 billion in student debt relief is a significant step towards alleviating the financial burden on borrowers. By addressing issues within the PSLF, SAVE, and IDR programs, the administration aims to provide much-needed financial relief and ensure that higher education remains an accessible pathway to opportunity.

For more details, you can read the full announcements on the U.S. Department of Education website and White House website.

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