President Joe Biden delivers an update on the Student Debt Relief Portal Beta Test in October 2022, as U.S. Secretary of Education Miguel Cardona looks on.
President Joe Biden delivers an update on the Student Debt Relief Portal Beta Test in October 2022, as U.S. Secretary of Education Miguel Cardona looks on.
Starting Wednesday, President Biden emailed 153,000 student loan borrowers enrolled in his signature repayment plan to let them know their debts — totaling $1.2 billion — have been forgiven.
The notice makes good on the administration’s promise to accelerate forgiveness for borrowers with low original balances who are enrolled in the Saving on a Valuable Education (Save) plan. Rather than wait 20 to 25 years for relief through other income-driven repayment plans, enrollees in the Save plan who borrowed less than $12,000 can have their debt wiped clean after 10 years of payments. The Education Department had originally planned to begin forgiveness in July but started identifying eligible borrowers this month.
“From day one of my Administration, I vowed to fix student loan programs so higher education can be a ticket to the middle class — not a barrier to opportunity,” Biden wrote in the email.
The effort recalls former President Donald Trump’s 2020 push to send letters to taxpayers alerting them to stimulus checks his administration processed by the millions during the early months of the coronavirus pandemic.
Ahead of his own reelection bid, Biden has privately expressed frustration that his administration has not received enough credit from voters for its actions to help consumers and bolster the economy. Some of Biden’s allies, including Rep. James E. Clyburn, D-S.C., have warned that the president could face electoral problems if he does not convince voters that he has kept his promises on a wide range of issues. Clyburn has specifically raised the president’s student loan relief pledge as one area where a significant gap exists between what Biden has accomplished and what voters believe he has done.
In his email, Biden described his list of actions to help students, touting “everything else my Administration has achieved for students and borrowers,” from debt cancellation to expanding Pell grants. “I promise you that I will never stop fighting for hardworking American families, and I will never stop working to make sure my Administration delivers for the American people.” Biden planned to reiterate the message Wednesday during a speech in Culver City, California.
With this latest round of student loan forgiveness, the Biden administration has approved almost $138 billion in debt relief for 3.9 million people. Under Biden, the Education Department has focused on lowering the debt burden of those who borrowed money for college, by expanding or easing rules for existing relief programs. It is also crafting another plan to offer relief to more borrowers after a loan forgiveness plan that Biden introduced in 2022 was struck down by the Supreme Court last year.
After the court’s decision, the Biden administration finalized the Save plan.
So far, about 7.5 million people of the more than 40 million with federal student loan debt are enrolled in Save. The plan pegs monthly student loan payments to earnings and family size, just like other income-driven plans. One big difference is that the new plan increases the amount of income protected from the calculation of debt payments from 150% to 225% of the federal poverty line.
That means a single borrower earning less than $15 an hour will be spared from payments. Those earning more would save an estimated $1,000 a year, according to the department. Even if borrowers’ monthly payment is $0, they will still get credit toward forgiveness. According to the Education Department, 4.3 million people enrolled in the plan have a $0 monthly payment.
The department began introducing some features of the Save plan in time for the resumption of student loan payments in October. This summer, the federal agency will start capping payments for undergraduate loans to 5% — down from 10% — of income above the 225% federal poverty threshold. Borrowers with debt from undergraduate and graduate studies will pay a weighted average between 5% and 10% toward their debts.
The faster path to cancellation could have a meaningful impact on people who attended community colleges, dropped out of college or are at risk of defaulting on their loans. The Education Department estimates that 85% of future community college borrowers, who typically take out small loans, could be debt-free within 10 years under the Save plan.
To create Save, the administration updated an existing loan repayment program that was long authorized by Congress through the Higher Education Act, giving it firmer legal ground than the debt relief program struck down by the Supreme Court.
But conservative groups and Republican lawmakers have vehemently opposed Biden’s student debt relief efforts, questioning his authority to wipe away billions of dollars in money owed to the federal government.
“His drip, drip, drip student loan forgiveness workarounds are lawless and make a mockery of the separation of powers,” Elaine Parker, president of the Job Creators Network Foundation, said in a statement. The small-business advocacy group filed one of the suits against Biden’s 2022 plan to forgive up to $20,000 in loans for some borrowers.
Parker said the administration’s actions “set a dangerous precedent that consolidates more power in the executive branch. College students themselves are the biggest losers of Biden’s college debt forgiveness workarounds because colleges are given a blank check to continue overcharging and saddling them with debt.”
Borrowers who receive emails notifying them that they will receive debt relief through the Save program do not need to take any further action to receive loan forgiveness. Student loan servicers, the intermediaries that collect payments on the federal government’s behalf, will begin discharging the debt in coming days, according to the department. Next week, the agency plans to directly contact borrowers who would be eligible for early cancellation under the Save plan but are not currently enrolled.
Starting Wednesday, President Biden emailed 153,000 student loan borrowers enrolled in his signature repayment plan to let them know their debts — totaling $1.2 billion — have been forgiven.
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